The only quantities of good 1 that Barbie can buy are 1 unit or 0 units. For x1 equal to 0 or 1 and for all positive values of x2, suppose that Barbie's preferences were represented by the utility function (x1 + 8) (x2 + 16) . Then if her income were $4, her reservation price for good 1 would be
A) $4.44.
B) $8.50.
C) $2.22.
D) $.50.
E) $1.90.
Correct Answer:
Verified
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