Minnie has an income of $300 in period 1 and will have an income of $625 in period 2.Her utility function is U(c₁, c₂)=c^0.80₁c^0.20₂, where c₁ is her consumption in period 1 and c₂ is her consumption in period 2.The interest rate is 0.25.If she unexpectedly won a lottery which pays its prize in period 2 so that her income in period 2 would be $1,250 and her income in period 1 would remain $300, then her consumption in period 1 would A)double. B)increase by $400. C)increase by $150. D)stay constant. E)increase by $120.

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The Answer of Minnie has an income of $300 in period 1 and will have an income of $625 in period 2.Her utility function is U(c₁, c₂)=c^0.80₁c^0.20₂, where c₁ is her consumption in period 1 and c₂ is her consumption in period 2.The interest rate is 0.25.If she unexpectedly won a lottery which pays its prize in period 2 so that her income in period 2 would be $1,250 and her income in period 1 would remain $300, then her consumption in period 1 would A)double. B)increase by $400. C)increase by $150. D)stay constant. E)increase by $120.

Minnie Has an Income of $300 in Period 1 and Will