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) 4 times as many whips as leather jackets.
B) 6 times as many whips as leather jackets.
C) 3 times as many whips as leather jackets.
D) 5 times as many leather jackets as whips.
E) only leather jackets.

Question

Quizplus · Accepted Answer

Kinko's utility function is U(w, j) = min{7w, 4w + 12j}. To maximize utility, the two expressions inside the min function should be equal: 7w = 4w + 12j. Solving for w in terms of j gives w = 4j. Therefore, Kinko will demand 4 times as many whips as leather jackets.

Let W Be the Number of Whips and J the Number