Katie Kwasi's Utility Function Is U(x₁, X₂) = 5(ln X₁)

question 70

Multiple Choice

Katie Kwasi's utility function is U(x₁, x₂) = 5(ln x₁) + x₂. Given her current income and the current relative prices, she consumes 10 units of x₁ and 15 units of x₂. If her income doubles, while prices stay constant, how many units of x₁ will she consume after the change in income?

• A) 10
• B) 15
• C) 5
• D) 20
• E) There is not enough information to determine how many.

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Definitions:

Declaration

A formal or explicit statement, announcement, or assertion.

Cash Flow Per Share

Normally computed as cash flow from operations per share.

Statement of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Financing Activities

Transaction and events in a business's operations that involve obtaining resources from creditors and repaying those resources or obtaining capital from owners and providing them with a return on, and of, their investment.