The utility function U(x₁,x₂)= min(x₁,x₂)is an apt description of preferences when: A)x₁is money and x₂is cocaine. B)x₁is $5 bills and x₂is $5 bills. C)x₁is a Coke and x₂is a Pepsi. D)x₁is a left hand glove and x₂is a right hand glove.

Question

Quizplus · Accepted Answer

The utility function U(x₁,x₂) = min(x₁,x₂) implies that the individual prefers to have two "matching" items rather than one of each. In this case, having two left hand gloves or two right hand gloves is more desirable than one of each. The other options (A, B, and C) do not fit this preference pattern.

The Utility Function U(x1,x2)= Min(x1,x2)is an Apt Description of Preferences

The Utility Function U(x₁,x₂)= Min(x₁,x₂)is an Apt Description of Preferences