In Problem 13, where x is whips and y is leather jackets, if Kinko's utility function were U(x, y) = min{ 7x, 3x + 12y}, then if the price of whips were $20 and the price of leather jackets were $60, Kinko would demand
A) 4 times as many leather jackets as whips.
B) 3 times as many whips as leather jackets.
C) 5 times as many whips as leather jackets.
D) 2 times as many leather jackets as whips.
E) only leather jackets.

Question

Quizplus · Accepted Answer

To maximize utility, Kinko will equalize the marginal utility per dollar spent on each good. The utility function suggests that the utility is determined by the minimum of 7x and 3x + 12y. Solving for the optimal consumption bundle, we find that Kinko will demand 3 times as many whips as leather jackets.

In Problem 13, Where X Is Whips and Y Is