Consider the agent\'s utility function Agent\'s utility u(p,q) = p-(1-4) Select

Question

Consider the agent's utility function Agent's utility u(p,q) = p-(1-4) Select the statement that is true. Select one: O a. This utility function suggests that the price is a "good" and quality is a "bad". Therefore, the indifference O b. This utility function suggests that the price is a "bad" and quality is a "good". Therefore, the O c. This utility function suggests that the price is a "good" and quality is a "bad". Therefore, the O d. This utility function suggests that both price and quality give the agent a positive marginal curves between price and quality would be upward sloping. indifference curves between price and quality would be upward sloping indifference curves (between price and quality) depicting it would be downward sloping. utility. Therefore, the indifference curves between price and quality would be downward sloping

Explanation / Answer

Ans)

The answer is option b.

This utility function suggests that the price is a bad and quality is a good.Therefore the indifference curves between price and quality would be upward sloping.

The graph comes out to be positively sloped with price on y axis and quantity on x axis indicating price to a bad.

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