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:

Instrumental Experts

Specialists whose knowledge or skills are used as a means to achieve a specific goal or task.

Multicultural Groups

Collections of individuals from various cultural backgrounds and heritages coming together in a community or organization.

Acculturation

is the process by which individuals adopt the cultural traits or social patterns of another group, often as a result of prolonged contact.

Promoting Harmony

The act of encouraging a peaceful and cooperative atmosphere within a group or between individuals.