A consumer has a utility function of U = min{4x1, x2}. The price of good 1 is $8 and the price of good 2 is $5. The consumer has $112 in income. How many units of each good does she consume?

x1 = 8, x2 = 8

x1 = 16, x2 = 4

x1 = 12, x2 = 8

x1 = 4, x2 = 16

None of the above

Consider the inter-temporal model of consumption studied in class, with two possible periods. Consider initially that an individual is a borrower. If the interest rate falls the individual can possibly become a saver?

True

False

If a good is normal, then the law of demand must always hold.

True

False