Mac's utility function is U(x, y) = max{ 2x - y, 2y - x}.
A) Mac's preferences are quasilinear.
B) If Mac has more x than y, any increase in his consumption of y would lower his utility.
C) If Mac has more x than y, a decrease in his consumption of y would raise his utility.
D) Mac always prefers more of each good to less.
E) Goods x and y are perfect substitutes.

Question

Quizplus · Accepted Answer

When Mac has more x than y, the utility function simplifies to U(x, y) = 2x - y. An increase in y would decrease the value of 2x - y, thus lowering his utility.

Mac's Utility Function Is U(x, Y) = Max{ 2x -