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:

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The legal entitlement allowing a party to challenge a court's decision in a higher court.

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A false or misleading statement made about a product or service, usually to persuade consumers to purchase.

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