Pablo's Utility Function Is , Where X Is the Number

question 7

Multiple Choice

Pablo's utility function is , where x is the number of x's he consumes per week and y is the number of y's he consumes per week. Pablo has $200 a week to spend. The price of x is $1. The price of y is currently $5 per unit. Pablo has received an invitation to join a club devoted to the consumption of y. If he joins the club, Pablo can get a discount on the purchase of y. If he belonged to the club, he could buy y for $1 a unit. How much is the most Pablo would be willing to pay to join this club?

• A) $8
• B) $28
• C) $36
• D) $56
• E) None of the above.

---

Definitions:

FIFO Method

A method of inventory valuation where the first items purchased are the first ones to be sold, standing for First In, First Out.

Inventory Valuation

The method or process by which the total value of a company's inventory is determined, based on the cost of goods, market value, or an agreed-upon valuation mechanism.

Aggregation Criteria

The conditions or guidelines used to combine similar items or transactions for reporting purposes.

Business Activities

Business activities encompass all actions a company engages in, such as buying, selling, manufacturing, and marketing, aimed at generating profits.