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

question 54

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 = 7 and y = 3. The prices change to P_x = 4 and P_y = 2 and the consumer chooses basket $B$ with x = 5 and y = 5.

• 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 preferred to basket A.

Explain the factors leading to gains from trade and how they enhance economic efficiency.

Distinguish between efficient and equitable distributions.

Analyze the impact of incentives on individual behavior in economic models.

Evaluate the role of government intervention in achieving economic efficiency and equity.

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Definitions:

Venous Return

Volume of blood returning to the heart.

Stroke Volume

The amount of blood ejected by the left ventricle of the heart in one contraction.

Heart Rate

The number of heartbeats per unit of time, typically expressed in beats per minute (bpm).

Cardiac Output

The volume of blood the heart pumps through the circulatory system in one minute, an important measure of cardiovascular health.