In Problem 2, Ambrose Has the Utility Function U(x₁, X₂)

question 27

Multiple Choice

In Problem 2, Ambrose has the utility function U(x₁, x₂) . If Ambrose were initially consuming 49 units of nuts (good 1) and 12 units of berries (good 2) , then what is the largest number of berries that he would be willing to give up in return for an additional 32 units of nuts?

• A) 9
• B) 21
• C) 8
• D) 4
• E) 2

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, important in the evaluation of investment opportunities.

Monthly Payments

Regular payments made over a period of time, often associated with loans or leases.

Financing

The act of financing commercial operations, procuring items, or placing capital into investments.

Loan Payment

A payment made by a borrower to a lender, consisting of both principal and interest, on a borrowed sum.