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Astrid's Utility Function Is U(HA, CA)= HACA

Question 45

Multiple Choice

Astrid's utility function is U(HA, CA) = HACA.Birger's utility function is min{HB, CB}.If Astrid's initial endowment is no cheese and 13 units of herring and if Birger's initial endowments are 8 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) 13/8 = p.
B) 8/p + 13/2p = 13.
C) 8/13 = p.
D) 8/(p + 1) + 6.50 = 13.
E) min{13, 8} = p.

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