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People Derive Utility in Their Lives from Consuming Goods (All

Question 91

Multiple Choice

People derive utility in their lives from consuming goods (all other goods) ,g,and clean air (measured as the number of particulates removed per m3) ,a,as measured with the utility function U(g,a) = g0.6a0.4.The price index of consumer goods equals $20 per day.Income equals $1000.What is likely to happen to the number of asthma cases as the price of clean air (abatement cost) increases from $10 to $20?


A) Asthma cases decrease because the particulants per m3 increases by 2 units.
B) Asthma cases increase because the particulant per m3 decreases by 2 units.
C) Asthma cases increase because the particulants per m3 increase by 2 units.
D) There is not enough information to answer this question.

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