Question: Suppose an individual's utility function is given by the following expression: U(q1,q2)=2q1+q2 Assume that each unit of good #1 (q1) costs $5 (p1=5) and each
Suppose an individual's utility function is given by the following expression:
U(q1,q2)=2q1+q2
Assume that each unit of good #1 (q1) costs $5 (p1=5) and each unit of good #2 (q2) costs $3 (p2=3). Which of the following changes would cause the largest increase in the quantity demanded ofq1?
a) The price of good #2 increases by 3%
b) The individual's income increases by 2%
d) The price of good #1 decreases by 1%
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