In a restaurant we can observe people consuming coffee, tea, and soft drinks. All are priced the same. If Sally consumes coffee and Ali consumes soft drinks, we can conclude that
A) Bill will be drinking tea.
B) Sally likes coffee more than Ali does, and Ali likes soft drinks more than Sally does.
C) Sally derives more utility from coffee than from tea or soft drinks, and Ali derives more utility from soft drinks than from tea or coffee.
D) the utility Sally receives from coffee consumption equals the utility that Ali receives from consuming soft drinks.

Question

Quizplus · Accepted Answer

We can infer that Sally and Ali have different preferences for drinks, but we cannot conclude anything about Bill's preferences. Therefore, choices A and B are incorrect. Also, since we don't have any information about the specific utility each person derives from the drinks, we cannot choose option D. The most reasonable conclusion is that Sally prefers coffee over tea and soft drinks, and Ali prefers soft drinks over tea and coffee. This aligns with choice C.

In a Restaurant We Can Observe People Consuming Coffee, Tea