In Problem 6, the Only Quantities of Good 1 That

question 5

Multiple Choice

In Problem 6, the only quantities of good 1 that Barbie can buy are 1 unit or zero units. For x₁ equal to zero or 1 and for all positive values of x₂, suppose that Barbie's preferences were represented by the utility function (x₁ + 10) (x₂ + 4) . Then if her income were $12, her reservation price for good 1 would be

• A) $2.50.
• B) $1.45.
• C) $2.91.
• D) $2.50
• E) $.30.

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Definitions:

Consideration

Something of value that is promised, given, or done that persuades a party to enter into a contract, making the contract legally enforceable.

Contract

A legally binding agreement between two or more parties that is enforceable by law.

Gift

A voluntary transfer of property or funds from one person to another without expectation of payment or compensation.

Automatically Terminate

The cessation of a contract or agreement without any action required by the parties involved, typically triggered by predefined conditions being met.