Yoram's Utility Function Is U(x, Y) = 2x + 5y

question 3

Multiple Choice

Yoram's utility function is U(x, y) = 2x + 5y. The price of x is $4 and the price of y is $15. Yoram has $150 a week to spend on x and y. Yoram is offered a chance to join a club of y consumers. If he joins, he can get y at a price of $10. What is the most that Yoram would be willing to pay to join the club?

• A) Nothing
• B) $30 a week
• C) $50 a week
• D) $75 a week
• E) None of the above.

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Definitions:

Manageable Questions

Questions that are structured in a way that they can be easily addressed or handled.

False Conclusion

An incorrect or misleading outcome derived from flawed reasoning or misunderstanding of facts.

Difficulty

The level of challenge or complexity associated with accomplishing a task or solving a problem.

Temporal Synchrony Bias

The cognitive bias whereby individuals give more weight to events that happen simultaneously or in close succession.