Bernice in Problem 5 Has the Utility Function U(x, Y)

question 9

Multiple Choice

Bernice in Problem 5 has the utility function u(x, y) = min{x, y}, where x is the number of pairs of earrings she buys per week and y is the number of dollars per week she has left to spend on other things. (We allow the possibility that she buys fractional numbers of pairs of earrings per week.) If she originally had an income of $17 per week and was paying a price of $3 per pair of earrings, then if the price of earrings rose to $7, the compensating variation of that price change (measured in dollars per week) would be closest to

• A) $8.50.
• B) $17.
• C) $35.
• D) $34.
• E) $33.

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Definitions:

Topsoil

The upper, outermost layer of soil, usually the top 2-8 inches, that has the highest concentration of organic matter and microorganisms.

Humus

The organic component of soil, formed by the decomposition of leaves and other plant material by soil microorganisms.

Leaching

The process where water carries soluble substances or small particles through the soil or other permeable material.

Dissolving

The process by which a solid, liquid, or gas forms a solution in a solvent, becoming evenly dispersed at the molecular or ionic level.