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

question 26

Multiple Choice

In Problem 2, Ambrose has the utility function U(x₁, x₂) = . If Ambrose were initially consuming 4 units of nuts (good 1) and 23 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 45 units of nuts?

• A) 30
• B) 7
• C) 10
• D) 20
• E) 5

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Definitions:

Interest Rate

The proportion of the main amount that is charged by the creditor for borrowing their money, or the interest earned on funds that are deposited.

Payments

Transactions involving the transfer of money from one party to another as a form of compensation for goods, services, or obligations.

Future Value

The projected value of an investment or an asset at a specific date in the future, taking into account factors like interest rates or returns.

Interest Rate

An interest rate is the percentage charged on the total amount of borrowed money, or paid on deposited funds, over a specific period of time.