Suppose That Molly from Problem 2 Had an Income of $500

question 16

Multiple Choice

Suppose that Molly from Problem 2 had an income of $500 in period 1 and an income of $250 in period 2. Suppose that her utility function were c^a₁c^1-a₂, where a = 0.60 and the interest rate were 25%. If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would

• A) double.
• B) increase by $300.
• C) increase by $150.
• D) stay constant.
• E) increase by $500.

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Definitions:

Class Analysis

An examination of societies based on the hierarchical categorization of individuals into classes, typically determined by wealth, occupation, and social status.

Functionalist Analysis

A sociological approach that interprets each part of society in terms of how it contributes to the stability of the whole society.

Stratification

The arrangement or classification of something into different groups, levels, or ranks, often used to describe social hierarchies.

Class Analysis

The examination of societal strata and its implications on individuals' lifestyles, opportunities, and social relationships, often focusing on inequalities.