The Only Quantities of Good 1 That Barbie Can Buy

question 25

Multiple Choice

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 + 8) .Then if her income were $20, her reservation price for good 1 would be

• A)$4.50.
• B)$.75.
• C)$8.
• D)$4.
• E)$1.23.

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Definitions:

Productive Efficiency

A state in which the economy or an economic system is able to produce maximum output from a given set of inputs without wasting resources.

Marginal Cost

The price involved in producing one more unit of a product or service.

Marginal Revenue

The additional revenue that is gained by selling one more unit of a product.

Deadweight Losses

Economic inefficiencies that occur when market equilibrium is disrupted, leading to a loss of economic welfare.