Given the expression $\min ( \mathrm { x } , \mathrm { y } )$ expenditure $P _ { x } x + P _ { y } y$ subject to: $\mathrm { U } ( x , y ) = \mathrm { U } ^ { * }$, the endogenous variables are:
A) $x$ and $P _ { x }$.
B) only $\mathrm { U } ^ { * }$.
C) $x$ and $y$.
D) $P _ { x }$ and $P _ { y }$.

Question

Quizplus · Accepted Answer

The endogenous variables are the variables that can be changed to achieve the desired outcome. In this case, the desired outcome is to maximize utility subject to the budget constraint. The variables that can be changed to achieve this outcome are the quantities of x and y consumed (x and y), since they directly affect utility, and the prices of x and y (P_x and P_y), since they affect the budget constraint. Therefore, the endogenous variables are x and y. The endogenous variables are the variables that are being solved for in order to maximize utility subject to the budget constraint. In this case, the endogenous variables are $x$ and $y$, as we are trying to find the optimal amounts of both goods that maximize utility. The prices, $P _ { x }$ and $P _ { y }$, are exogenous variables that are given to us and do not change based on the choices we make. The utility level, $\mathrm { U } ^ { * }$, is also given to us and is not a variable that we can choose. Therefore, the correct answer is C.

Given the Expression min⁡(x,y)\min ( \mathrm { x } , \mathrm { y } )min(x,y)

Given the Expression $\min ( \mathrm { x } , \mathrm { y } )$