Mike Consumes Two Commodities, X and Y, and His Utility

question 46

Multiple Choice

Mike consumes two commodities, x and y, and his utility function is min{x + 2y, y + 2x}. He chooses to buy 8 units of good x and 16 units of good y. The price of good y is $.50. What is his income?

• A) $32
• B) $40
• C) $24
• D) $16
• E) Mike's income cannot be found unless the price of x is given too.

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Definitions:

Resources Are Scarce

The fundamental economic problem that the available resources are limited compared to the unlimited wants and needs of people.

Economic Theories

Comprehensive frameworks or models used to explain and predict economic phenomena and guide the analysis of economic issues and policy.

Economic Policy

Strategies and decisions made by the government concerning the economy, including taxation, government spending, and interest rates.

Economic Generalizations

Broad statements that apply to economic behavior or trends, often used to predict future economic outcomes.