Before an Uneven Rise in Prices Allan Consumed Five Bread

question 13

Multiple Choice

Before an uneven rise in prices Allan consumed five bread and six juice.After the price increase and with an increased welfare payment from the government Allan consumes four bread and seven juice.Does the government payment represent a true cost-of-living adjustment?

• A)Yes,if the two consumption bundles lie on the same indifference curve.
• B)Yes,if the second bundle yields more utility than the first.
• C)No,the first bundle is clearly preferred.
• D)Not enough information.

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Definitions:

Agency Agreement

A contract in which one party (the agent) agrees to act on behalf of another party (the principal) in business transactions.

Commission

A fee or percentage of a transaction paid to an agent or broker for facilitating a sale or service.

Lease

A contractual agreement by which one party (the lessor) grants another party (the lessee) the right to use an asset, property, or space for a specified period in return for payment.

Adequate Supply

Refers to a quantity of goods or materials that is sufficient to meet demand or requirements.