By how would her period one consumption increase or decrease

Question

Problem

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^0.80 c^0.20, where c₁ is her consumption in period 1 and c₂ is her consumption in period 2. The interest rate is .25. She unexpectedly won a prize that made her period 2 income $1,000 (period 1 income remained $800). By how much would her period 1 consumption increase or decrease? Show your work.

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.