Consider the utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ .The indifference curves for this utility function will be:
A)vertical
B)horizontal
C)upward sloping
D)L-shaped

Question

Quizplus · Accepted Answer

The utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ implies that the utility a person derives depends on the smaller of 5x and 7y. The indifference curves for this utility function will therefore take the shape of an L, with a vertical segment representing where 5x is smaller than 7y, and a horizontal segment representing where 7y is smaller than 5x. Therefore, option D is the correct answer. The utility function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$ implies that the utility is determined by the smaller of the two quantities. Therefore, the indifference curves will be L-shaped with a corner solution at the origin. The slope of the indifference curves will be positive and equal to $-\frac{5}{7}$ in quadrant I and $-\frac{7}{5}$ in quadrant II. So, the answer is option D, L-shaped.

Consider the Utility Function U=min⁡(5x,7y)\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )U=min(5x,7y)

Consider the Utility Function $\mathrm { U } = \min ( 5 \mathrm { x } , 7 \mathrm { y } )$