Mort's Utility Function Is U(x₁, X₂) = X₁x₂

question 24

Multiple Choice

Mort's utility function is U(x₁, x₂) = x₁x₂. His income is $100. The price of good 2 is $10. Good 1 is priced as follows. The first 6 units cost $10 per unit and any additional units cost $5 per unit. What consumption bundle does Mort choose?

• A) (5, 5)
• B) (7, 3.5)
• C) (9, 3)
• D) (6, 4)
• E) None of the above.

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Definitions:

Individual Transferable Quota (ITQ)

A fisheries management tool that allocates a certain quantity of fish that can be caught by individuals or companies.

Market Price

The present cost at which an item or service may be purchased or sold within a specific market.

Individual Transferable Quota (ITQ)

A policy tool that allocates the right to harvest a natural resource amount among users through transferable quotas.

Market Price

The price at which a good or service can be bought or sold in the open market, determined by supply and demand.