A Parent Has Two Children Living in Cities with Different

question 19

Multiple Choice

A parent has two children living in cities with different costs of living.The cost of living in city B is 4 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 $12,000.The parent wants to give a total of $1,000 to her two children.Her utility function is U(C A, C B) = C A C 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)each child $500, even though this will buy less goods for the child in city B
• B)the child in city B 4 times as much money as the child in city A.
• C)the child in city A 4 times as much money as the child in city B.
• D)the child in city B 2 times as much money as the child in city A.
• E)the child in city A 2 times as much money as the child in city B.

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Definitions:

Family Life Cycle

A series of stages through which a family typically progresses, such as marriage, childbirth, upbringing of children, and the eventual departure of adult children from the home.

Evolutionary Theory

A scientific theory proposing that species change over time through a process of natural selection, genetic variation, and reproduction.

Provide Well

The act of adequately supplying what is needed, often used in the context of fulfilling financial or emotional needs in familial or relationship settings.

Socioeconomic Status

A measure of an individual's or family's economic and social position relative to others, based on income, education, and occupation.