Multiple Choice
Astrids utility function is U(H A, C A) = H A C A.Birgers utility function is min{H B, C B}.If Astrids initial endowment is no cheese and 5 units of herring and if Birgers initial endowments are 6 units of cheese and no herring, then where p is a competitive equilibrium price of herring and cheese is the numeraire, it must be that demand equals supply in the herring market.This implies that
A) 6/(p + 1) + 2.50 = 5.
B) 5/6 = p.
C) 6/p + 5/2p= 5.
D) 6/5 = p.
E) min{5, 6} = p.
Correct Answer:

Verified
Correct Answer:
Verified
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