The only quantities of good 1 that Tomoko can buy are 1 unit or 0 units. For all positive values of x2, Tomoko's preferences are represented by the utility function (x1 + 14) (x2 + 16) . If her income is $20 and the price of good 2 is $1, then Tomoko's reservation price for good 1 is
A) $.88.
B) $8.50.
C) $2.40.
D) $4.80.
E) $1.04.
Correct Answer:
Verified
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