A Parent Has Two Children Living in Cities with Different

question 15

Multiple Choice

A parent has two children living in cities with different costs of living. The cost of living in city B is 3 times the cost of living in city A. The child in city A has an income of $2,000 and the child in city B has an income of $6,000. The parent wants to give a total of $1,000 to her two children. Her utility function is U(C_A, C_B) = C_AC_B, where C_A and C_B are the consumptions of the children living in cities A and B respectively. She will choose to give

• A) the child in city B 1.50 times as much money as the child in city A.
• B) the child in city A 3 times as much money as the child in city B.
• C) the child in city B 3 times as much money as the child in city A.
• D) each child $500, even though this will buy less goods for the child in city B.
• E) the child in city A 1.50 times as much money as the child in city B.

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Definitions:

Gas Exchange

The biological process through which organisms exchange oxygen and carbon dioxide with their environment, crucial for respiration.

Leaf Blade

The broad, flat part of a leaf where most photosynthesis occurs, responsible for absorbing sunlight and exchanging gases.

Petiole

The stalk attaching the leaf blade to the stem in plants, providing support and transporting nutrients and water.

Stem

The main structural part of a plant that supports leaves, flowers, or fruits and transports fluids between different parts of the plant.