Andrew's Utility Function Is U(x₁, X₂) = 4x²₁ + X₂

question 29

Multiple Choice

Andrew's utility function is U(x₁, x₂) = 4x²₁ + x₂. Andrew's income is $32, the price of good 1 is $16 per unit, and the price of good 2 is $1 per unit. What happens if Andrew's income increases to $80 and prices do not change? (Hint: Does he have convex preferences?)

• A) He will consume 48 more units of good 2 and the same number of units of good 1 as before.
• B) He will increase his consumption of both goods.
• C) He will reduce his consumption of good 2.
• D) He will consume the same number of units of good 2 and 3 more units of good 1 as before.
• E) None of the above.

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Definitions:

Identity

The qualities, beliefs, personality, looks, and/or expressions that make a person (self-identity) or group (particular social category or social group).

Primary Sex Characteristics

The physical features that are directly involved in reproduction, such as the ovaries in females and the testes in males.

Sexually Mature

A state of biological development at which an individual is capable of reproducing.

Reproductive Organs

Structures in an organism that are involved in the production of offspring, including ovaries and testes.