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 8 units of herring and if Birger's initial endowments are 7 units of cheese and no herring, then where p is a competitive equilibrium price of herring and cheese is the numeraire, demand equals supply in the herring market.This implies that
A) 7/p + 8 / 2p = 8.
B) 7/(p + 1) + 4 = 8.
C) 8/7 = p.
D) 7/8 = p.
E) min{8, 7} = p.
Correct Answer:

Verified
Correct Answer:
Verified
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