Ambrose's Utility Function Is

question 8

Multiple Choice

Ambrose's utility function is . If the price of nuts (good 1) is $1, the price of berries (good 2) is $5, and his income is $190, how many units of berries will Ambrose choose?

• A) 36
• B) 101
• C) 18
• D) 17
• E) 21

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Definitions:

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used as an indicator of inflation.

Nuclear Missiles

Weapons of mass destruction powered by nuclear energy, capable of causing significant destruction and loss of life over a wide area.

CPI

Consumer Price Index, an indicator that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

GDP Deflator

A measure of the price level of all domestically produced goods and services in a country and is used to convert output measured at current prices into constant-dollar GDP.