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

question 25

Multiple Choice

Ellsworth's utility function is U(x, y) = min{x, y}.Ellsworth has $150 and the price of x and the price of y are both $1.Ellsworth's boss is thinking of sending him to another town where the price of x is $1 and the price of y is $2.The boss offers no raise in pay.Ellsworth, who understands compensating and equivalent variation perfectly, complains bitterly.He says that although he doesn't mind moving for its own sake and the new town is just as pleasant as the old, having to move is as bad as a cut in pay of $A.He also says he wouldn't mind moving if when he moved he got a raise of $B.What are A and B?

• A)A = 50 and B = 50.
• B)A = 75 and B = 75.
• C)A = 75 and B = 100.
• D)A = 50 and B = 75.
• E)None of the above.

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Definitions:

Mechanical Means

Methods or techniques that involve machinery or tools to achieve a result.

Stylistic Device

Techniques used by writers and speakers to give an expressive, effective, and creative form to their works or speech.

De-emphasize

De-emphasize means to reduce the significance, attention, or stress given to a particular element or aspect within communication or presentation.

Active Voice

A grammatical structure where the subject of the sentence performs the action expressed by the verb.