Waldo's Utility Function Is U(x, Y) = Xy

question 45

Multiple Choice

Waldo's utility function is U(x, y) = xy. Waldo consumes 5 units of x and 25 units of y.

• A) Waldo would be willing to make small exchanges of x for y in which he would give up 5 units of x for every unit of y he got.
• B) Waldo would be willing to trade away all of his x for y as long as he got more than 5 units of y for every unit of x he gave up.
• C) Waldo likes x and y equally well so he is always willing to exchange 1 unit of either good for more than 1 unit of the other.
• D) Waldo will always be willing to make trades at any price if he does not have equal amounts of the two goods.
• E) None of the above.

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