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.

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Definitions:

Interest Rate

The percentage charged on the total amount of borrowed money or paid on savings, indicating the cost of borrowing or the reward for saving.

Equilibrium Interest Rate

The equilibrium interest rate is the rate at which the demand for funds equals the supply of funds in the financial markets, balancing savings and investments.

Loanable Funds

The total amount of financial capital available for borrowing in financial markets.

Investment Projects

Initiatives undertaken by individuals, companies, or governments to allocate resources in the expectation of future financial returns.