Sandy derives utility from consuming "all other goods," g,and clean air (measured by particulate matter removed per m³),a,as measured by the utility function U(g,a)= g^0.6a^0.4.The price of "all other goods" is $20 and the price of clean air (abatement)equals $10.Brian is the only other consumer in the market for clean air and demands 10 units of clean air.What is the market demand for clean air? A) Total market demand is 14 units of clean air. B) Total market demand is 12 units of clean air. C) Total market demand is 10 units of clean air. D) Total market demand is 16 units of clean air.

Question

Quizplus · Accepted Answer

To find the market demand for clean air, we need to add Sandy's demand for clean air to Brian's demand. Brian demands 10 units of clean air. However, the question does not provide explicit information on how many units of clean air Sandy demands, so we cannot directly calculate Sandy's demand from the given utility function and prices. Given this, the correct answer cannot be determined based on the information provided in the question. However, assuming choice A is correct, it implies Sandy demands 4 units of clean air (14 total market demand - 10 units demanded by Brian), but this specific calculation or rationale behind Sandy's demand is not provided in the question.

Sandy Derives Utility from Consuming "All Other Goods," G,and Clean