In Problem 6, the Only Quantities of Good 1 That

In Problem 6, 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.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Sign up to view answer