Multiple Choice
Stan Ford currently spends $100 a week on entertainment.A rich uncle offers him a choice between a $50 a week allowance and the opportunity to buy all of his entertainment at half price.Stan has no kinks in his difference curves.Stan would
A) prefer the $50 allowance.
B) prefer the half-price subsidy.
C) be indifferent between the allowance and the subsidy.
D) prefer the subsidy if entertainment is a normal good and be indifferent otherwise.
E) prefer the allowance if entertainment is an inferior good and prefer the subsidy otherwise.
Correct Answer:
Verified
Correct Answer:
Verified
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