The Only Quantities of Good 1 That Tomoko Can Buy

question 100

Multiple Choice

The only quantities of good 1 that Tomoko can buy are 1 unit or 0 units.For all positive values of x₂, Tomoko's preferences are represented by the utility function (x₁ + 14) (x₂ + 16) .If her income is $20 and the price of good 2 is $1, then Tomoko's reservation price for good 1 is

• A)$.88.
• B)$8.50.
• C)$2.40.
• D)$4.80.
• E)$1.04.