The Only Quantities of Good 1 That Barbie Can Buy

question 14

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 + 4) .Then if her income were $16, her reservation price for good 1 would be

• A)$2.86.
• B)$2.50.
• C)$5.71.
• D)$1.50.
• E)$.57.

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Definitions:

Finance

The science of managing funds, including activities such as saving, lending, investing, budgeting, and forecasting.

Reasoning Errors

Reasoning errors are mistakes in logical thinking that occur when drawing conclusions or making decisions, often leading to incorrect or biased outcomes.

Overly Optimistic

Describes an excessively positive outlook on situations, often disregarding potential risks or negative outcomes.

Over-Confidence

A cognitive bias where an individual's belief in their own abilities or the prospects of a situation are excessively optimistic beyond what evidence supports.