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

question 24

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 3 units of herring and if Birger's initial endowments are 13 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)13/3 = p.
• B)3/13 = p.
• C)13/p + 3/2p = 3.
• D)13/(p + 1)+ 1.50 = 3.
• E)min{3, 13} = p.

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