Astrid's Utility Function Is U(H_A, C_A)= H_AC_A

question 16

Multiple Choice

Astrid's utility function is U(H_A, C_A) = H_AC_A.Birger's utility function is min{H_B, C_B}.If Astrid's initial endowment is no cheese and 8 units of herring and if Birger's initial endowments are 7 units of cheese and no herring, then where p is a competitive equilibrium price of herring and cheese is the numeraire, demand equals supply in the herring market.This implies that

• A)7/p + 8 / 2p = 8.
• B)7/(p + 1)+ 4 = 8.
• C)8/7 = p.
• D)7/8 = p.
• E)min{8, 7} = p.

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Definitions:

Logical Thinking

The process of using systematic reasoning to reach a conclusion or solve problems.

Irreversibility

In Piaget’s theory, the inability of the young child to mentally reverse an action.

Preoperational

The second stage in Piaget's theory of cognitive development, during which children start to use language to explore and understand their worlds but do not yet comprehend concrete logic.

Clay

A natural, earthy material consisting of fine-grained minerals, typically used in ceramics and construction, and known for its plasticity when wet.