Joseph's Utility Function Is Given by U_J =X_A + 2x_B

question 53

Multiple Choice

Joseph's utility function is given by U_J =x_A + 2x_B, where x_A denotes his consumption of apples and x_B his consumption of bananas.Clara's utility function is given by U_C =3x_A + 2x_B.Joseph and Clara shop at the same grocery store.

• A)When we observe that Joseph leaves the store with some bananas, then we can deduce that Clara also buys some bananas.
• B)There exist prices of apples and bananas such that both consumers buy strictly positive amounts of both goods.
• C)When we observe that Joseph leaves the store with some apples and some bananas, then we can deduce that Clara also buys some apples and some bananas.
• D)When we observe that Joseph leaves the store with some apples, then we can deduce that Clara also buys some apples.
• E)Apples and bananas are perfect complements for Joseph.

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Definitions:

Non-Risky Asset

A financial asset with a guaranteed or highly predictable return rate, such as government bonds.

Expected Return

The anticipated gain or loss for an investment over a given period, often expressed as a percentage.

Standard Deviation

A gauge for the degree of spread or discrepancy in a series of data points.

Real Rate of Return

The rate of return on an investment after adjusting for inflation, representing the actual growth in purchasing power.