Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F x C. The price of clothing is always $1. Suppose the current price of food is $3. The price of food that clears both markets is; O $0.5 $1 O $2 $2.5 $4

Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F x C. The price of clothing is always $1. Suppose the current price of food is $3. The price of food that clears both markets is; O $0.5 $1 O $2 $2.5 $4

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter5: Consumer Choice: Individual And Market Demand

Section: Chapter Questions

Problem 3DQ

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