Multiple Choice
Ezra spends all of his income on pizza and gasoline. Suppose Ezra is presented with two options: A and B. Option A will subsidize gasoline by decreasing its price by 50%. Option B will increase Ezra's income by the cost of the subsidy in Option A. Which of the following is correct?
A) Ezra will never prefer Option A to Option B.
B) Ezra needs to spend all of his income on gasoline to prefer Option B.
C) Ezra needs to spend all of his income on pizza to prefer Option B to Option A.
D) Ezra would never be indifferent between Option A and Option B.
Correct Answer:
Verified
Correct Answer:
Verified
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