Let w be the number of whips and j the number of leather jackets.If Kinko's utility function is U(x, y)=min{7w, 4w + 12j}, then if the price of whips is $20 and the price of leather jackets is $40, Kinko will demand
A)6 times as many whips as leather jackets.
B)5 times as many leather jackets as whips.
C)3 times as many whips as leather jackets.
D)4 times as many whips as leather jackets.
E)only leather jackets.

Question

Quizplus · Accepted Answer

Kinko's utility function is based on the minimum of {7w, 4w + 12j}. To maximize utility, Kinko will equate 7w to 4w + 12j. Solving for the ratio of w to j (whips to leather jackets) gives w/j = 4, indicating Kinko will demand 4 times as many whips as leather jackets.

Let W Be the Number of Whips and J the Number