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

question 21

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 $12 and was paying a price of $4 for a pair of earrings, then if the price of earrings went up to $6, the equivalent variation of the price change would be

• A)$4.80.
• B)$3.43.
• C)$1.71.
• D)$9.60.
• E)$4.11.

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Definitions:

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, superego, and reality.

Id

In psychoanalytic theory, the part of the mind in which innate instinctive impulses and primary processes are manifest.

Superego

The third psychic structure, which functions as a moral guardian and sets forth high standards for behavior.

Cognitive Therapy

A form of psychotherapy that emphasizes the identification and modification of dysfunctional thought patterns.