A School Is Trying to Determine a Nutritional Diet to Feed

question 34

Multiple Choice

A school is trying to determine a nutritional diet to feed its students.The school would like to offer some combination of milk and beans.The school's objective is to minimize cost,subject to meeting the minimum nutritional requirements of protein,calcium,and calories.The cost and nutritional content of each food,along with the minimum nutritional requirements are shown here. $$\begin{array} { | l | l | l | l | } \hline \text { Nutrient } & \begin{array} { l } \text { Kidney } \\\text { Beans }\end{array} & \text { Tofu } & \begin{array} { l } \text { Minimum Daily } \\\text { Requirement }\end{array} \\\hline \text { Cost per pound } & \$ 0.90 & \$ 1.50 & \\\hline \begin{array} { l } \text { Calcium in units per } \\\text { pound }\end{array} & 15 & 6 & 30 \\\hline \text { Protein in units per pound } & 10 & 10 & 40 \\\hline \begin{array} { l } \text { Calories in units per } \\\text { pound }\end{array} & 3 & 9 & 18 \\\hline\end{array}$$ At the optimum solution,what is the total number of units of protein included in the diet?

• A)30
• B)40
• C)51
• D)18

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Definitions:

Risk Aversion

A preference for avoiding risk, where individuals or organizations opt for lower-risk options even when higher risks may offer greater potential rewards.

Adverse Selection

Refers to the fact that “bad types” are likely to be selected in transactions where one party is better informed than the other. Examples include higher risk individuals being more likely to purchase insurance, more low-quality cars (lemons) being offered for sale, or lazy workers being more likely to accept job offers. Adverse selection is a precontractual problem that arises from hidden information about risks, quality, or character.

Insurance

A financial product offering protection against the potential financial loss or liability resulting from specific events or circumstances, in exchange for a premium payment.

Adverse Selection

A situation in markets where buyers or sellers have information that other participants do not, leading to an unfair advantage or market inefficiency.