Mandy Has an Income of $800 in Period 1 and Will

question 48

Multiple Choice

Mandy has an income of $800 in period 1 and will have an income of $500 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 .25.If she unexpectedly won a lottery which pays its prize in period 2 so that her income in period 2 would be $1,000 and her income in period 1 would remain $800, then her consumption in period 1 would

• A)stay constant.
• B)double.
• C)increase by $320.
• D)increase by $400.
• E)increase by $320

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Definitions:

Crista Ampullaris

A sensory structure within the semicircular canals of the inner ear that detects head movements, aiding in balance and spatial orientation.

Otolithic Membrane

A structure found in the vestibular system, responsible for sensing changes in linear acceleration and head position.

Tectorial Membrane

A structure located within the inner ear, playing a critical role in the detection of sound vibrations by the hair cells.

Vestibular Nucleus

A cluster of neurons in the brainstem that plays a crucial role in processing information related to balance and spatial orientation from the inner ear.