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

question 50

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 15 units of x₁ and 65 units of x₂ in period 1, then:

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

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Definitions:

Adult Height

The final stature an individual achieves after the completion of growth, largely determined by genetics and environmental factors.

Immunization

A process that stimulates the body’s immune system by causing production of antibodies to defend against attack by a particular contagious disease. Creation of antibodies may be accomplished either naturally (by having the disease), by injection, by drops that are swallowed, or by a nasal spray.

Lethal Disease

A fatal illness capable of causing death.

Breast Milk

The milk produced by human breasts intended for infant feeding, rich in nutrients and antibodies.