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Amy's utility function is U = xy. The price of x is $2 and the price of y is $2. Initially her income was $160.

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Amy's utility function is U = xy. The price of x is $2 and the price of y is $2. Initially her income was $160. However, she loses $40, so her new income is $120. If the price of y remains unchanged, what should the new price of x be, so that Amy can attain the level of utility that she enjoyed before her income fell. a. 1. b. 9/8. c. 8/9. d. 1/2

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