Question
The figure below displays two different utility-maximizing bundles for an individual. Assume the individual's utility function is given by the following expression: U(q1,q2)=q a 1
The figure below displays two different utility-maximizing bundles for an individual. Assume the individual's utility function is given by the following expression:
U(q1,q2)=qa1 +qb2
where a and b in the utility function above are constants. Which one of the statements below can explain the individual's utility maximizing bundle moving from bundle A to bundle B in the figure below:
a) The price of good 1 increased and a=1 & b=1/2
b) The price of good 2 increased and a=2 & b=1
c) The price of good 1 increased and a=2 & b=1
d) The price of good 2 increased and a=1 & b=1/2
e) The price of good 2 increased and a=1 & b=2
f) The price of good 1 increased and a=1 & b=2
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