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Suppose the market for medicinal herbs (x1) and orange juice (x2) has only two consumers Adam and Barbara. Suppose Adam and Barbara's utility functions are
Suppose the market for medicinal herbs (x1) and orange juice (x2) has only two consumers
Adam and Barbara. Suppose Adam and Barbara's utility functions are both Cobb-Douglas and
identical: u(x1,x2) = x1x2
. Their incomes are denoted by mAand mB, respectively.
What is the market demand for orange juice?
a. X2= 0.5 ( mA+ mB) / p2
b. X2= ( mA+ mB) / (p1 + p2)
c. X2= 0.5 ( mA+ mB) * p2
d. X2= 0.5 mB/ p2
e. X2= 2 ( mA- mB) / p1
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