Consider a Society Consisting of Just a Farmer and a Tailor.The

question 86

Multiple Choice

Consider a society consisting of just a farmer and a tailor.The farmer has 30 units of food but no clothing.The tailor has 60 units of clothing but no food.Suppose each has the utility function U = F^1/3C2/3.If the price of clothing is always $1,and the food price is currently $1,then we can conclude

• A)the market is at a competitive equilibrium.
• B)the price of food will drop towards a competitive equilibrium.
• C)the price of food will increase towards a competitive equilibrium.
• D)None of the above.

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Definitions:

Assimilation

A cognitive process where individuals integrate new information into existing frameworks or schemas.

Accommodation

In psychology, the process by which individuals adjust their schemas or ways of thinking to incorporate new information.

Abstract Thinking

The capacity to conceptualize about entities, principles, and notions absent in the physical realm.

Logical Thinking

The process of reasoning consistently in a structured, orderly, and rational manner to come to a conclusion or solve a problem.