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:

Allocated Efficiently

refers to the optimal distribution of resources so that it maximizes the net benefit received from their use.

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A former federal socialist state in Northern Eurasia that existed from 1922 to 1991, composed of multiple Soviet republics.

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Regulations that set specific benchmarks for the composition or performance of fuels used in vehicles to reduce environmental impact.

Federal Tax

Taxes imposed by the federal government on income, property, and goods and services, used to fund public services and government operations.