Quasimodo from Your Workbook Has the Utility Function U(x, M)=

question 15

Multiple Choice

Quasimodo from your workbook has the utility function U(x, m) = 100x - x²/2 + m, where x is his consumption of earplugs and m is money left over to spend on other stuff.If he has $10,000 to spend on earplugs and other stuff and if the price of earplugs rises from $50 to $75, then his net consumer's surplus

• A)falls by 937.50.
• B)increases by 468.75.
• C)falls by 2,937.50.
• D)falls by 625.
• E)increases by 1,875.

---

Definitions:

Economic Pie

A metaphorical term indicating the total amount of wealth or resources available for distribution within an economy.

Efficiency

Refers to the ability to achieve a desired result without wasting materials, time, or energy.

Equality

The circumstance in which all individuals possess identical opportunities, rights, and standing.

Opportunity Cost

The cost of the next best alternative foregone as a result of making a decision.