Hillary Has an Initial Endowment of $500 and Is Interested

question 18

Multiple Choice

Hillary has an initial endowment of $500 and is interested in two things: how many visits she can make to the doctor and how much money will be left over to spend on other things.When a trip to the doctor costs $60, Hillary sees the doctor 3 times.After health care reform, a visit to the doctor will cost $10 but her taxes will rise by $170.

• A)Hillary will be made better off by health care reform.
• B)Hillary violates the Weak Axiom of Revealed Preference.
• C)We cannot tell how health care reform will affect Hillary.
• D)Hillary will be made worse off by health care reform.
• E)Hillary violates the Strong Axiom of Revealed Preference.

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Definitions:

Accurate

Without faults or inaccuracies; meticulously exact and accurate in every detail.

Accurate

The quality of being correct or precise.

Cent

A monetary unit worth one-hundredth of various currencies, including the US dollar and the Euro.

Repeating Decimal

A decimal in which one or more digits repeat infinitely.