In an Isolated Mountain Village, the Only Crop Is Corn

question 53

Multiple Choice

In an isolated mountain village, the only crop is corn. Villagers plan for two time periods. In the first time period each villager will harvest 100 bushels. In the second time period, no corn will be harvested. There is no trade with the rest of the world and no stocks of corn remain from before the first period. Corn can be stored from one time period to the next, but rats eat 25% of what is stored. The villagers all have Cobb-Douglas utility functions U(C₁, C₂) = C₁C₂ and can allocate their own corn between consumption and storage as they wish. If the introduction of cats to the village reduces the rats' predations to 10% of what is stored,

• A) consumption in the first time period will not change.
• B) villagers will consume 5% more corn in each time period.
• C) consumption in the first time period will increase but by less than 5%.
• D) consumption in the second time period will not change.
• E) consumption in the first time period will decrease.

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Definitions:

Interposition

A visual cue in which one object partially covers another, leading the observer to perceive it as closer.

Weber's Law

A principle of perception that states the smallest change in a stimulus that can be detected is a constant proportion of the stimulus level.

Fechner's Law

A principle in psychophysics stating that the perceived intensity of a stimulus changes proportionally to the logarithm of the actual stimulus intensity.

Thorndike's Law

A principle stating that behaviors followed by positive outcomes are more likely to be repeated, whereas behaviors followed by negative outcomes are less likely to be repeated.