Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F x C. The price of clothing is always $1. Suppose the current price of food is $3. The price of food that clears both markets is; %3D O $0.5 O$1 O $2 O$2.5 O$ 4 Show your work

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food
but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility
function U = F x C. The price of clothing is always $1. Suppose the current price of food is
$3. The price of food that clears both markets is;
O $0.5 O $1 O $2 O $ 2.5 O$4
Show your work
Transcribed Image Text:Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F x C. The price of clothing is always $1. Suppose the current price of food is $3. The price of food that clears both markets is; O $0.5 O $1 O $2 O $ 2.5 O$4 Show your work
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