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

question 2

Multiple Choice

Ron's utility function is given by U(x,y) = min[x,y]. If the price of x is 2 and the price of y is 1 and if Ron's preferred consumption bundle is [4,4], then his income is:

• A)16.
• B)10.
• C)14.
• D)12.

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Definitions:

Fannie Mae

A government-sponsored enterprise established to expand the flow of mortgage money by creating a secondary market for mortgage loans.

Money Market Instrument

Short-term financial instruments that are highly liquid and considered safe, such as treasury bills and certificates of deposit.

Preferred Stock

A class of ownership in a corporation with a fixed dividend, senior to common stock but junior to bonds in claim on assets and earnings.

Commercial Paper

Short-term unsecured promissory notes issued by companies to finance their short-term liabilities.