In Problem 6, the Only Quantities of Good 1 That

question 4

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 + 6) (x₂ + 4) . Then if her income were $16, her reservation price for good 1 would be

• A) $2.86.
• B) $2.50.
• C) $5.71.
• D) $1.50.
• E) $.57.