A consumer has a utility function of the form U(x1, x2) = u(x1) + x2 where good 1 is a discrete good
Question: A consumer has a utility function of the form
U(x1, x2) = u(x1) + x2
where good 1 is a discrete good (say, a car); the only possible levels of consumption of good x1 are x1 = 0 and x1 = 1. Suppose also that u(0) = 0 and p2 is normalized to one.
(a)The consumer will definitely choose x1 = 1 if p1 is strictly less than what?
(b) What is the indirect utility function?
Price: $2.99
Answer: The solution consists of 2 pages
Deliverables: Word Document
Deliverables: Word Document
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