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

question 14

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 $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:

Attribution Theory

A psychological theory that explains how people determine the causes of their own and others' behavior, attributing them to internal dispositions or external situations.

Individual Behaves

Refers to the actions or conduct of a person in response to their environment or stimuli.

Individual Reward Systems

A scheme designed to provide incentives to employees based on their personal performance, achievements, or contributions to organizational objectives.

Career Enhancement

activities or strategies undertaken to improve one’s career prospects, position, or success, including training, networking, and skill development.