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.

---

Definitions:

Neuron Communication

The process by which neurons transmit signals to each other, involving electrical impulses and chemical neurotransmitters.

Hypothalamus

A region of the brain below the thalamus that coordinates both the autonomic nervous system and the activity of the pituitary, controlling body temperature, thirst, hunger, and other homeostatic systems.

Cerebellum

A large structure of the vertebrate brain, located under the occipital lobe, that plays an important role in motor control.

Reticular Formation

An extensive network of neurons located in the brainstem that plays a key role in controlling arousal and consciousness.