Sandy Derives Utility from Consuming "All Other Goods," G,and Clean

question 7

Multiple Choice

Sandy derives utility from consuming "all other goods," g,and clean air (measured by particulate matter removed per m³) ,a,as measured by the utility function U(g,a) = g^0.6a^0.4.The price of "all other goods" is $20 and the price of clean air (abatement) equals $10.Brian is the only other consumer in the market for clean air and demands 10 units of clean air.What is the market demand for clean air?

• A) Total market demand is 14 units of clean air.
• B) Total market demand is 12 units of clean air.
• C) Total market demand is 10 units of clean air.
• D) Total market demand is 16 units of clean air.

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Definitions:

Yield Per Acre

The amount of a crop produced on one acre of land.

Lemonade Market

A hypothetical or real market scenario used to explain basic economic concepts, often involving the buying and selling of lemonade.

Lemons

A bright yellow, acidic fruit commonly used for its juice, zest, or as a garnish in cooking and baking.

Supply

The total amount of a good or service available for purchase at all possible prices in a given market, at a given time.