Bernice Has the Utility Function U(x, Y)= Min{x, Y}

question 8

Multiple Choice

Bernice 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:

Achievement Motivation

An individual's drive to excel or achieve success in tasks, reflecting a desire for significant accomplishment, mastery of skills, or control over standards of excellence.

Intrinsic Motivation

Motivation that is driven by an interest or enjoyment in the task itself, rather than relying on external pressures or rewards.

Extrinsic Motivation

Motivation driven by external rewards such as money, fame, grades, or praise, rather than by intrinsic rewards related to the activity itself.

Self-Disclosure

The process by which individuals communicate personal, private information about themselves to others.