• 2022-06-09
    Ernie's utility function is U (x,y) = xy. Ernie consumes 4 units of x and 16 units of y.
    A: Ernie likes x and y equally well so he is always willing to exchange 1 unit of either good for more than one unit of the other.
    B: None of all
    C: Ernie would be willing to make small exchanges of x for y in which he gives up 4 units of x for everyunit of y he gets.
    D: Ernie would be willing to trade away all of his x for y so long he gets more than 4 units of y for every unit of x he gives up.