Suppose a Consumer Buys Two Goods $x$ And $y$ , and Has Income of $30

question 48

Multiple Choice

Suppose a consumer buys two goods, $x$ and $y$ , and has income of $30. Initially P_x = 3 and P_y = 3 and the consumer chooses basket $A$ with x =5 and y= 5. The prices change to P_x = 4 and P_y = 2 and the consumer chooses basket $B$ with x = 1 and y = 13.

• A) These choices are consistent with utility maximization.
• B) These choices are not consistent with utility maximization.
• C) With this information it is not possible to determine if these choices are consistent with utility maximization.
• D) Basket \(B\) must be strictly preferred to basket \(A\) .

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Definitions:

Dieters

Individuals who regulate their diet with the objective of losing weight or maintaining a certain body weight.

Stress Levels

The intensity of stress an individual feels, which can affect their physical and mental wellbeing.

Habits

Repeated behaviors or actions that individuals perform automatically or with little conscious thought.

Pursuing Goals

The systematic efforts taken towards achieving specific aims or objectives, which often involve planning and motivation.