Suppose That Molly from Problem 2 Had an Income of $600

question 11

Multiple Choice

Suppose that Molly from Problem 2 had an income of $600 in period 1 and an income of $880 in period 2. Suppose that her utility function were c^a₁c^1-a₂, where a = 0.80 and the interest rate were 10%. If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would

• A) increase by $240.
• B) stay constant.
• C) double.
• D) increase by $480.
• E) increase by $600.

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Definitions:

Anonymous Member

A person who participates in an activity or group without revealing their identity.

Social Loafing

The phenomenon where individuals exert less effort when working in a group than when working individually.

Group Task

A collaborative effort where individuals come together to achieve a specified goal or complete a project.

Less Effort

Refers to situations or tasks that require minimal physical or mental exertion.