Ambrose's Utility Function Is

question 9

Multiple Choice

Ambrose's utility function is . If the price of nuts (good 1) is $1, the price of berries (good 2) is $7, and his income is $259, how many units of berries will Ambrose choose?

• A) 8
• B) 197
• C) 9
• D) 18
• E) 12

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Definitions:

Merchant Ships

Commercial vessels used in international trade to transport goods and sometimes passengers.

Risk Aversion

The tendency of individuals to prefer outcomes with lower uncertainty over outcomes with higher uncertainty, even if the latter may offer a higher expected return.

Equilibrium Premium

The price at which the supply and demand for insurance coverage balance, setting a market rate for premiums.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the point where the supply and demand curves intersect.