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

question 29

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 $20 per week and was paying a price of $2 per pair of earrings, then if the price of earrings rose to $5, the compensating variation of that price change (measured in dollars per week) would be closest to

• A) $20.
• B) $41.
• C) $40.
• D) $10.
• E) $39.

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Definitions:

Female Carriers

Women who carry one copy of a mutated gene for a recessive genetic condition, potentially passing the condition to their offspring without showing symptoms themselves.

Hemophilia

A genetic disorder that impairs the body's ability to make blood clots, leading to excessive bleeding from even minor injuries and requiring careful management to prevent complications.

Frontal Lobe

The region of the brain located at the front of each cerebral hemisphere, responsible for decision making, problem solving, and controlling behavior.

Female Carriers

Women who carry one copy of a mutated gene associated with a recessive condition, potentially capable of passing the trait to their offspring.