Solved

Astrids Utility Function Is U(H A, C A)= H a C

Question 56

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:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions