A Parent Has Two Children Living in Cities with Different

question 4

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 $2,000 and the child in city B has an income of $6,000.The parent wants to give a total of $1,000 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 1.50 times as much money as the child in city A.
• B)the child in city A 3 times as much money as the child in city B.
• C)the child in city B 3 times as much money as the child in city A.
• D)each child $500, even though this will buy less goods for the child in city B.
• E)the child in city A 1.50 times as much money as the child in city B.

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Definitions:

Cost of Goods Sold

The expense associated with manufacturing the goods that a business sells during a specific period.

Value Streams

A value stream refers to the series of activities required to design, produce, and deliver a good or service to a customer, highlighting the value-added and non-value-added steps in the process.

Pull Production

A manufacturing strategy where production is based on customer demand rather than speculative production, aiming to reduce waste and increase efficiency.

Zero Waste

An approach to resource management aimed at avoiding any waste by reusing products and materials in as many cycles as possible.