Alice and Bob have identical preferences, u(x, y) In(x) + y. However, they have different incomes - Alice's income is IA > Py and Bob's income is IB < Py. Suppose that py increases by a very small amount, and consider the following statements: = At her current income, Alice views x as a gross substitute for y. (ii) At his current income, Bob views x as a gross substitute for y. (iii) At her current income, the increase in py decreases Alice's utility. (iv) At his current income, the increase in py decreases Bob's utility. Which of the above statements is correct? (a) (i) only (b) (ii) only (c) (i) and (iii) only (d) (ii) and (iv) only (e) All of the statements are correct.
Alice and Bob have identical preferences, u(x, y) In(x) + y. However, they have different incomes - Alice's income is IA > Py and Bob's income is IB < Py. Suppose that py increases by a very small amount, and consider the following statements: = At her current income, Alice views x as a gross substitute for y. (ii) At his current income, Bob views x as a gross substitute for y. (iii) At her current income, the increase in py decreases Alice's utility. (iv) At his current income, the increase in py decreases Bob's utility. Which of the above statements is correct? (a) (i) only (b) (ii) only (c) (i) and (iii) only (d) (ii) and (iv) only (e) All of the statements are correct.
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter8: Polynomials
Section8.1: Adding And Subtracting Polynomials
Problem 58PPS
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Transcribed Image Text:Alice and Bob have identical preferences, u(x, y) In(x) + y. However, they have
different incomes - Alice's income is IA > Py and Bob's income is IB < Py. Suppose
that py increases by a very small amount, and consider the following statements:
=
At her current income, Alice views x as a gross substitute for y.
(ii) At his current income, Bob views x as a gross substitute for y.
(iii) At her current income, the increase in py decreases Alice's utility.
(iv) At his current income, the increase in py decreases Bob's utility.
Which of the above statements is correct?
(a) (i) only
(b) (ii) only
(c) (i) and (iii) only
(d) (ii) and (iv) only
(e) All of the statements are correct.
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