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The Only Quantities of Good 1 That Barbie Can Buy

Question 3

Multiple Choice

the only quantities of good 1 that Barbie can buy are 1 unit or zero units.For x1 equal to zero or 1 and for all positive values of x2, suppose that Barbie's preferences were represented by the utility function (x1 + 12) (x2 + 8) .Then if her income were $36, her reservation price for good 1 would be


A) $3.38.
B) $6.77.
C) $1.50.
D) $4.50.
E) $.57.

Correct Answer:

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