Author Question: The rationing function of price A) occurs when there is a movement of resources into or out of ... (Read 17 times)

Awilson837 · **on:** Jul 1, 2018

The rationing function of price

A) occurs when there is a movement of resources into or out of markets as a result of changes in the equilibrium market price.
B) is also known as the guiding function of price.
C) occurs when consumers change their tastes and preferences.
D) occurs only when the market experiences severe shortages.

Question 2

Jose consumes wallets (q1 ) and a composite of other goods (q2 ). The price of wallets is p1 and the price of other goods is p2 = 1.

Jose's utility from wallets depends also on his incomewith a higher income, he values a wallet more because he has more to put inside it His utility is given by the equation U(q1,q2 ) = q1Yq2 Derive Jose's demand for wallets.