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

question 12

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 20 units of herring and if Birger's initial endowments are 4 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)4/(p + 1)+ 10 = 20.
• B)20/4 = p.
• C)4/20 = p.
• D)4/p + 20/2p = 20.
• E)min{20, 4} = p.

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