The Only Quantities of Good 1 That Barbie Can Buy

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 + 8) .Then if her income were $20, her reservation price for good 1 would be

A) $4.50.
B) $.75.
C) $8.
D) $4.
E) $1.23.

Correct Answer:

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