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

question 6

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 $18 per week and was paying a price of $8 per pair of earrings, then if the price of earrings rose to $14, the compensating variation of that price change (measured in dollars per week) would be closest to

• A) $12.
• B) $25.
• C) $7.20.
• D) $24.
• E) $23.

---

Definitions:

Kinesthetic

Relating to the perception of movement, where the sensation is experienced through the movement of muscles, tendons, and joints.

Communication Style

Communication style pertains to the way an individual expresses themselves verbally and non-verbally, which can vary greatly among different people and contexts.

Visual

Relating to seeing or sight, or the ability to perceive objects and light with the eyes.

See in Writing

A request or the need to have information, instructions, or agreements documented in a tangible form.