Asked by
Angelia Winata
on Dec 01, 2024
Verified
Katie Kwasi's utility function is U(x1, x2) = 2(ln x1) + x2.Given her current income and the current relative prices, she consumes 10 units of x1 and 15 units of x2.If her income doubles, while prices stay constant, how many units of x1 will she consume after the change in income?
A) 20
B) 18
C) 10
D) 5
E) There is not enough information to determine how many.
Utility Function
It is an economic model representing the preference level of consumers for different combinations of goods and services.
Income
A measure of the flow of funds from various sources, such as wages, investments, or business activities, that an individual or entity receives over a period of time.
Consumption
The act of using goods and services to satisfy needs and wants.
- Recognize and elucidate the effect of alterations in income and prices on the demand of consumers.
Verified Answer
TL
Learning Objectives
- Recognize and elucidate the effect of alterations in income and prices on the demand of consumers.