Astrid's utility function is U(H_A, C_A)= H_AC_A.Birger's utility function is min{H_B, C_B}.If Astrid's initial endowment is no cheese and 8 units of herring and if Birger's initial endowments are 7 units of cheese and no herring, then where p is a competitive equilibrium price of herring and cheese is the numeraire, demand equals supply in the herring market.This implies that A)7/p + 8 / 2p = 8. B)7/(p + 1)+ 4 = 8. C)8/7 = p. D)7/8 = p. E)min{8, 7} = p.

Question

Quizplus · Accepted Answer

The Answer of Astrid's utility function is U(H_A, C_A)= H_AC_A.Birger's utility function is min{H_B, C_B}.If Astrid's initial endowment is no cheese and 8 units of herring and if Birger's initial endowments are 7 units of cheese and no herring, then where p is a competitive equilibrium price of herring and cheese is the numeraire, demand equals supply in the herring market.This implies that A)7/p + 8 / 2p = 8. B)7/(p + 1)+ 4 = 8. C)8/7 = p. D)7/8 = p. E)min{8, 7} = p.

Astrid's Utility Function Is U(HA, CA)= HACA

Astrid's Utility Function Is U(H_A, C_A)= H_AC_A