Which of the Following Utility Functions Represent Preferences of a Consumer

question 7

Multiple Choice

Which of the following utility functions represent preferences of a consumer who does not have homothetic preferences?

• A) U(x, y) = xy.
• B) U(x, y) = x + 2y.
• C) U(x, y) = x + y^.5.
• D) U(x, y) = min{x, y}.
• E) More than one of the above.

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Definitions:

Perfectly Inelastic

A situation in which the quantity demanded or supplied of a good does not change in response to a change in price.

Elastic

Elastic refers to a situation where the demand for a product or service significantly changes in response to price changes.

Inelastic

Describes a situation where the quantity demanded or supplied of a good or service is relatively unresponsive to changes in its price.

Profit-Maximizing Quantity

The level of output at which a business achieves the highest possible profit, balancing incremental costs and revenues.