Suppose That Molly Had an Income of $200 in Period

Multiple Choice

Suppose that Molly had an income of $200 in period 1 and an income of $460 in period 2.Suppose that her utility function were c^a₁c^1-a₂, where a = 0.40 and the interest rate were 15%.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 $80.
B) increase by $40.
C) double.
D) stay constant.
E) increase by $200.