Refer to Figure 11.2. Suppose that Ca = 40, MPC = 0.8, I = 10. What is the value of consumption in equilibrium?

From the table below, choose the optimum option using marginal analysis

Option Total Cost ($) 1 150 2 100 3 80 4 70 5 90 6 120 What will be an ideal response?

For a consumer not bound by the collateral constraint, a reduction in the price of the collateral leads to

A) nothing. B) an increase in current consumption and a decrease in future consumption. C) a decrease in current consumption and no change in future consumption. D) a decrease in current and future consumption.