A Parent Has Two Children Living in Cities with Different

question 8

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 $2,000 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 $1,000, even though this will buy less goods for the child in city B
• B)the child in city B 3 times as much money as the child in city A.
• C)the child in city B 1.50 times as much money as the child in city A.
• D)the child in city A 3 times as much money as 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:

Perfected Security

A security interest in a collateral that is legally binding and has been properly filed or registered, affording the creditor priority over other claimants.

Fixtures

In real estate, fixtures are items of personal property that are attached or fixed to the land or building in such a way that they become part of the real property.

Perfected

A legal term indicating that an interest or lien on a property has been legally completed and registered, making it enforceable against third parties.

Goods

Tangible personal property, which includes physical items that can be seen, touched, and possessed.