Julia is offered two options of government subsidies: $100 food stamp or $100 cash.If she receives $100 cash,she will spend $80 on food.If equivalent evaluation is measured for the situation when only $100 is available to her,the equivalent evaluation is
A)greater than $100.
B)equal to $100.
C)less than $100.
D)Not enough information.

Question

Quizplus · Accepted Answer

If Julia chooses the $100 cash option, she would spend $80 on food, leaving her with only $20 to spend on other necessities. On the other hand, if she chooses the $100 food stamp option, the entire amount could be used for food, which would provide more benefit than the cash option. Therefore, the equivalent evaluation for the $100 food stamp option is greater than $100, making it the better choice.

Julia Is Offered Two Options of Government Subsidies: $100 Food