In Periods 0 and 1, Ralph Consumed Two Goods, X₁

question 93

Multiple Choice

In periods 0 and 1, Ralph consumed two goods, x₁ and x₂, and his utility functions in the two periods were identical. In period 0 the prices of x₁ and x₂ were $2 and $1 respectively, and Ralph consumed 10 units of x₁ and 80 units of x₂. In period 1 the prices of x₁ and x₂ were identical, and equal to $1. If Ralph consumed 40 units of x₁ and 40 units of x₂ in period 1:

• A)he was better off in period 0.
• B)we cannot say whether he was better off in one of the periods.
• C)he was equally well off in both periods.
• D)he was better off in period 1.

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