Two part question:

1a.A household has a wealth endowment of $5 and can use this to either consume (C) or save (S).Consumption of C generates MB of $2.15, 1.72, 1.4, 1.22 & 1.10 from the 1st, 2nd,... dollar allocated to consumption, respectively.If the current interest rate in the market is 33%, then to maximize the total payoff from C and S, it is optimal for the household to choose C = _____ and S = _____.

1b.Consider the marginal revenue function and marginal benefit function given in the previous question, with the households wealth at $5.If the interest rate is now 20%, then in the market we have a case of

a) market equilibrium

b) excess demand for funds

c) excess supply of funds