Joe's Utility Function Is Given by U(x,y)= Min[x,y]

question 8

Multiple Choice

Joe's utility function is given by U(x,y) = min[x,y] . The price of x is $4 and the price of y is $2 and Joe's income is $12. If the price of x decreases to $2 but Joe's income stays constant, then:

• A)the substitution effect is zero.
• B)the substitution effect exceeds the income effect.
• C)the income effect is zero.
• D)the total effect is zero.

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Definitions:

Functionalists

A perspective in sociology and psychology that emphasizes the importance of understanding the purpose or function of behavior and social institutions.

Organism

A living entity capable of growth, reproduction, and response to stimuli.

Structuralists

Psychologists who analyze the basic elements of thoughts and sensations to understand the structure of the mind.

Behavior

The actions or reactions of an object or organism, usually in relation to the environment.