Millie's Utility Function Is U(x, Y) = Min{x, Y}

question 58

True/False

Millie's utility function is U(x, y) = min{x, y}. She maximizes her utility subject to a budget constraint. The price of x is the same as the price of y. If the price of x rises and the price of y and her income remain constant, then her consumption of y will certainly decrease.

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Definitions:

Call Option

A financial contract granting the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain period.

Exercise Price

The price at which an option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Put Option

A financial agreement that provides the purchaser with the option to sell a certain quantity of an underlying asset at a predetermined price during a set timeframe, without being required to do so.