Stan Ford Currently Spends $100 a Week on Entertainment

question 40

Multiple Choice

Stan Ford currently spends $100 a week on entertainment.A rich uncle offers him a choice between a $50 a week allowance and the opportunity to buy all of his entertainment at half price.Stan has no kinks in his difference curves.Stan would

• A)prefer the $50 allowance.
• B)prefer the half-price subsidy.
• C)be indifferent between the allowance and the subsidy.
• D)prefer the subsidy if entertainment is a normal good and be indifferent otherwise.
• E)prefer the allowance if entertainment is an inferior good and prefer the subsidy otherwise.

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Definitions:

Economic Challenges

Issues or difficulties related to the economic system of a country or the global economy that affect financial stability, growth, and prosperity.

Rich-Country Standards

The benchmarks or norms established by wealthy countries for quality of life, economic performance, and governance.

Optimal Resource Allocation

The most efficient distribution of resources in an economy, achieving the best possible balance of production and distribution to meet the needs and wants of the population.

ITQs

Individual Transferable Quotas, a system in resource management where individuals or companies have the right to a portion of the total allowable catch or quota.