Bernice's Preferences Can Be Represented by the Utility Function, U(x

question 31

Multiple Choice

Bernice's preferences can be represented by the utility function, U(x, y) = min{x, y}. She faces prices ($2, $1) , and her income is $12. If prices change to ($3, $1) , the compensating variation

• A) equals the equivalent variation.
• B) is $2 greater than the equivalent variation.
• C) is $2 smaller than the equivalent variation.
• D) is $1 greater than the equivalent variation.
• E) There is not enough information to determine which variation is larger.

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Definitions:

Dilation of Pupils

The expansion of the pupils of the eyes, which can occur in response to low light conditions or during states of arousal, excitement, or attraction.

Emotional Arousal

A state of heightened physiological and psychological activity including feelings, emotions, and mood changes.

Left Frontal Lobe

A section of the brain associated with linguistic skills, logical reasoning, and control over voluntary movements.

Brain Activity

The electrical and biochemical actions that occur within the brain, enabling functions like thought, emotion, and movement.