Badger Madison consumes only beer and sausages. His income is $100. Beer costs him $.50 per can and sausages cost $1 each. Where x is the number of cans of beer and y the number of sausages he consumes per week, Badger's utility function is U(x, y) = -[(x - 50) 2 + (y - 40) 2].
A) Badger must always be unhappy since whatever he consumes, his utility is negative.
B) He has monotonic preferences.
C) If his income increases, he won't change the commodity bundle that he buys.
D) If the price of beer goes down, he will buy more beer.
E) More than one of the above statements is true.
Correct Answer:
Verified
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