Figure 5-14 -Martha Initially Buys the Combination of Pens and Pencils Shown

question 11

Multiple Choice

Figure 5-14
-Martha initially buys the combination of pens and pencils shown as A in Figure 5-14.After the prices of both goods change, she buys combination B.It must be true that

• A)Martha prefers A to B.
• B)Martha prefers B to A.
• C)Martha is indifferent between A and B.
• D)Martha's preferences between A and B cannot be determined from the information given.

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Definitions:

Cobb-Douglas

A type of production function used in economic modeling to represent the relationship between two or more inputs (typically labor and capital) and the output they produce.

Labor Earnings

The income earned by workers for their labor, typically measured in terms of wages or salaries.

Endowed

Having been provided or supplied with a particular attribute, resource, or piece of knowledge naturally or by circumstance.

Going Prices

Refers to the current prices at which goods or services are being sold in the market.