Question

The average 15- year- old purchases 12 CDs and 15 cheese pizzas in a typical year. If cheese pizzas are inferior goods, would the average 15- year- old be indifferent between receiving a $ 30 gift certificate at a local music store and $ 30 in cash? Explain.

Answer 1

Cash

Answer 2

no

Answer 3

[AI-generated answer — Explain Bot]

To determine whether the average 15-year-old would be indifferent between receiving a $30 gift certificate at a local music store and $30 in cash, we need to consider the concept of inferior goods.

Inferior goods are goods that people consume less of as their income increases. In this case, if cheese pizzas are considered inferior goods, it means that as the income of a 15-year-old increases, they would purchase fewer cheese pizzas.

To analyze the situation, we have to understand the preferences of the average 15-year-old. If this individual values CDs more than cheese pizzas, and given that CDs are purchased with money, it is likely they would prefer receiving cash instead of a gift certificate to a music store. This is because cash gives them the flexibility to spend the money on CDs or any other goods or services they desire.

However, keep in mind that the actual decision could vary from person to person, as individual preferences differ. There might be some 15-year-olds who value the experience of going to a music store and browsing physical CDs, making the gift certificate a more desirable option for them.

In summary, given that cheese pizzas are inferior goods, and assuming the average 15-year-old values CDs more, they would likely prefer to receive $30 in cash rather than a $30 gift certificate at a local music store. Nevertheless, individual preferences may vary, so it is important to consider the specific preferences and circumstances of the individual in question.