A Parent Has Two Children Living in Cities with Different

question 20

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 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)the child in city B 3 times as much money as the child in city A.
• B)the child in city B 1.50 times as much money as the child in city A.
• C)each child $500, even though this will buy less goods for the child in city B.
• 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:

Psychology Textbooks

Educational materials focused on the study of the mind and behavior.

Alternative Explanations

Different theories or reasons that account for a phenomenon, suggesting that the initial explanation may not be the only or complete reason.

Uncertainties

Situations or conditions where the outcomes are unpredictable or unknown, often leading to anxiety or stress in individuals.

Analyze Assumptions

The process of critically examining the underlying beliefs and biases that inform one's thoughts or arguments.