A Parent Has Two Children Living in Cities with Different

question 1

Multiple Choice

A parent has two children living in cities with different costs of living.The cost of living in city B is 3 times the cost of living in city A.The child in city A has an income of $3,000 and the child in city B has an income of $9,000.The parent wants to give a total of $2,000 to her two children.Her utility function is U(C_A, C_B) = C_AC_B, where C_A and C_B are the consumptions of the children living in cities A and B respectively.She will choose to give

• A)the child in city B 3 times as much money as the child in city A.
• B)each child $1,000, even though this will buy less goods for the child in city B.
• C)the child in city A 3 times as much money as the child in city B.
• D)the child in city B 1.50 times as much money as the child in city A.
• E)the child in city A 1.50 times as much money as the child in city B.

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Definitions:

Beyond Budgeting Model

A management approach that operates without traditional budgeting, focusing on flexible and adaptive management processes.

Performance Targets

Predefined goals set by a company to measure and assess the efficiency, productivity, and success of its activities.

Senior Head Office

The central or main office location where senior management and key corporate functions are based.

Direct Labour-Hours

The total hours worked by employees directly involved in the production of goods or provision of services.