Hideki Spends All of His Money on Movie Tickets and Groceries

question 120

Multiple Choice

Hideki spends all of his money on movie tickets and groceries. Suppose Hideki is presented with two options: A and B. Option A gives him a voucher of $X that he can only spend on groceries. Option B gives him $X that he can spend on either or both of the goods. Which of the following is correct?

• A) Hideki always prefers Option A to Option B.
• B) Hideki can never be indifferent between Option A and Option B.
• C) Hideki is always indifferent between Option A and Option B.
• D) Hideki can prefer Option B to Option A but cannot prefer Option A to Option B.

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Definitions:

Proponent

An advocate or supporter of a particular idea, policy, or project.

Monetarism

An economic theory which argues that the management of the economy should be primarily based upon adjustments to the monetary supply, by governmental policies.

Obsession

A persistent and intrusive thought or idea that preoccupies a person's mind, often leading to compulsive behavior.

Quantity Theorists

Economists who believe that the quantity of money available in an economy significantly affects its price levels and inflation rates.