In Problem 13, where x is whips and y is leather jackets, if Kinko's utility function were U(x, y) = min{ 5x, 3x + 6y}, then if the price of whips were $20 and the price of leather jackets were $20, Kinko would demand
A) 3 times as many whips as leather jackets.
B) 4 times as many leather jackets as whips.
C) 2 times as many leather jackets as whips.
D) 5 times as many whips as leather jackets.
E) only leather jackets.

Question

Quizplus · Accepted Answer

The utility function U(x, y) = min{5x, 3x + 6y} implies that utility is determined by the lesser of the two expressions. To maximize utility, Kinko will equalize the two expressions: 5x = 3x + 6y, which simplifies to 2x = 6y, or x = 3y. Thus, Kinko demands 3 times as many whips as leather jackets.

In Problem 13, Where X Is Whips and Y Is