Cindy's utility function for BMWs and money is given by 19,000x + y, where x is the number of BMWs she has and y is the amount of money she has.Her income is $24,000.Her reservation price for one BMW is
A)$19,000.
B)$19,000 - y.
C)$5,000.
D)$19,000 - p.
E)$43,000.

Question

Quizplus · Accepted Answer

Cindy's utility function shows that each BMW gives her a utility equivalent to $19,000. Therefore, her reservation price, or the maximum amount she is willing to pay for one BMW, is $19,000.

Cindy's Utility Function for BMWs and Money Is Given by 19,000x