Now suppose that the household seeks to solve max log (c1) + B [log (c2) + blog (c3)], subject to C1 + $1 = W1, (7 ) C2 + $2 = (1 +7) $1, (8 ) C3 = (1 + r) $2, (9) where 0 0 given. The discount factor is 0 0, and the capital elasticity of output is 0