Elmer's Utility Function Is U(x, Y)= Min{x, Y²}

question 15

Multiple Choice

Elmer's utility function is U(x, y) = min{x, y²}.If the price of x is $20, the price of y is $20, and Elmer chooses to consume 8 units of y, what must Elmer's income be?

• A)$2,880
• B)$320
• C)$1,540
• D)$1,440
• E)There is not enough information to tell.

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Definitions:

Capital Allocation Line

A graph line that represents all possible combinations of risk-free and risky assets for an investor.

Mean Standard Deviation Graph

A graphical representation that shows the variability of a dataset around its mean value, often used in statistics.

Expected Return

Expected return is the weighted average of the probable returns of an investment, accounting for all possible scenarios.

Risky Asset

An asset that carries a significant chance of losing part or all of its investment value.