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

question 17

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 $10 per week and was paying a price of $8 per pair of earrings, then if the price of earrings rose to $13 per pair, the compensating variation of that price change (measured in dollars per week) would be closest to

• A)$3.57.
• B)$5.56.
• C)$12.11.
• D)$11.11.
• E)$10.11.

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Definitions:

Store Sales

Periodic events where retailers offer products at discounts to increase traffic and sales volume.

Sales Calculation

The process of determining the total revenue generated from goods or services sold over a specific period.

Wheel Of Retailing

A theory suggesting that retail business goes through a cycle starting from entering the market as a low price, low margin operation, to becoming more upscale with higher prices and services.

Retail Outlets

Physical stores or shops where goods are sold directly to the consumer.