If Bernice (Whose Utility Function Is Min{x, Y}, Where X

question 13

Multiple Choice

If Bernice (whose utility function is min{x, y}, where x is her consumption of earrings and y is money left for other stuff) had an income of $12 and was paying a price of $4 for a pair of earrings, then if the price of earrings went up to $6, the equivalent variation of the price change would be

• A) $4.80.
• B) $3.43.
• C) $1.71.
• D) $9.60.
• E) $4.11.

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Definitions:

Variable Manufacturing Overhead

Indirect production costs that vary with the level of production output, such as utilities or materials handling expenses.

Last Month

A reference to the immediate month preceding the current one.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard variable overhead expected, based on the actual activity level.

Variable Overhead

Indirect, fluctuating costs that change with the level of production or organizational activity.