Ms Quasimodo in Problem 3 Has the Utility Function U(x

question 15

Multiple Choice

Ms. Quasimodo in Problem 3 has the utility function U(x, m) , where x is her consumption of earplugs and m is money left over to spend on other stuff. If she has $10,000 to spend on earplugs and other stuff and if the price of earplugs rises from $50 to $70, then her net consumer's surplus

• A) falls by 800.
• B) increases by 400.
• C) falls by 600.
• D) falls by 2,800.
• E) increases by 1,600.

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