Bernice's Preferences Can Be Represented by the Utility Function, U(x

question 5

Multiple Choice

Bernice's preferences can be represented by the utility function, U(x, y) = min{x, y}.She faces prices ($2, $1) , and her income is $12.If prices change to ($3, $1) , the compensating variation

• A)equals the equivalent variation.
• B)is $2 greater than the equivalent variation.
• C)is $2 smaller than the equivalent variation.
• D)is $1 greater than the equivalent variation.
• E)There is not enough information to determine which variation is larger.

---

Definitions:

State Unemployment Taxes

Taxes imposed by state governments on businesses based on the amount of wages paid to employees, used to fund unemployment compensation benefits for workers who have lost their jobs.

Withholding Allowances

Claims made on a W-4 form that determine the amount of an employee’s income not subject to federal income tax withholding.

Percentage Method

A way to calculate taxes or other financial figures by applying a specific percentage rate to a base amount.

Federal Income Tax

An annual financial obligation enforced by the IRS on earnings of persons, businesses, trusts, and other legal entities.