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In Periods 0 and 1, Ralph Consumed Two Goods, X1

Question 48

Multiple Choice

In periods 0 and 1, Ralph consumed two goods, x1 and x2, and his utility functions in the two periods were identical. In period 0 the prices of x1 and x2 were $2 and $1 respectively, and Ralph consumed 10 units of x1 and 80 units of x2. In period 1 the prices of x1 and x2 were identical, and equal to $1. If Ralph consumed 40 units of x1 and 40 units of x2 in period 1:


A) he was better off in period 0.
B) we cannot say whether he was better off in one of the periods.
C) he was equally well off in both periods.
D) he was better off in period 1.

Correct Answer:

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