A Child Is Given $5

question 220

Multiple Choice

A child is given $5.20 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table. Which combination would give the child the maximum utility out of spending $5.20?

• A)8 chocolates and 2 hard candies
• B)5 chocolates and 4 hard candies
• C)3 chocolates and 5 hard candies
• D)2 chocolates and 4 hard candies

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Definitions:

Self-Enhancement Motive

The desire to maintain, increase, or enhance one's positive self-view.

Appraisal Motive

The desire to find out why things happen and what the causes of events are, often related to understanding one's own emotional responses.

Consistency Motive

The desire to maintain harmony and coherence among one’s beliefs, attitudes, and behaviors to avoid cognitive dissonance.

Self-Handicapping

A behavior where an individual creates obstacles or excuses to avoid self-blame in case of failure.