People derive utility in their lives from consuming goods (all other goods), g, and clean air (measured as the number of particulates removed per m3), a, as measured with the utility function U(g,a) = g0.6a0.4. The price index of consumer goods equals $20 per day. Income equals $1000. What is likely to happen to the number of asthma cases as the price of clean air (abatement cost) increases from
$10 to $20?
A) Asthma cases decrease because the particulates per m3 increase by 2 units.
B) Asthma cases increase because the particulates per m3 decrease by 2 units.
C) Asthma cases increase because the particulates per m3 increase by 2 units.
D) There is not enough information to answer this question.
C
Economics
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