If Bernice (Whose Utility Function Is Min{x, Y}, Where X

question 3

Multiple Choice

If Bernice (whose utility function is min{x, y}, where x is her consumption of earrings and y is money left for other stuff) had an income of $16 and was paying a price of $8 for earrings when the price of earrings went up to $10, then the equivalent variation of the price change was

• A)$3.56.
• B)$1.45.
• C)$2.91.
• D)$7.11.
• E)$3.23.

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Definitions:

Oil

A natural fossil fuel used as a primary source of energy for heating, transport, and industrial processes.

Coal

A flammable black or dark brown sedimentary rock primarily utilized for energy production.

Iron Ore

A naturally occurring mineral from which iron (Fe) is extracted to make steel and various other products.

Wildlife

Wild animals collectively; the native flora and fauna in a particular region not domesticated or cultivated by humans.