If Bernice (whose utility function is min{x, y}, where x is her consumption of earrings and y is money left for other stuff) had an income of $16 and was paying a price of $8 for earrings when the price of earrings went up to $10, then the equivalent variation of the price change was

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To find the equivalent variation of the price change, we need to calculate how much Bernice's income would have to change to keep her at the same level of utility after the price increase.

Before the price increase, Bernice was spending half of her income on earrings ($8 out of $16), so she was able to buy 2 earrings. This left her with $8 for other stuff.

After the price increase, Bernice can only buy 1.6 earrings with her $16 income ($10 per earring), and she'll have $6.40 left for other stuff (since she spent $10.40 on earrings).

Using Bernice's utility function, we can calculate her utility before and after the price increase:

Utility before = min{2, 8} = 2 
Utility after = min{1.6, 6.4} = 1.6

To find the equivalent variation, we need to find the income level that would give Bernice the same utility as she had before the price increase. We can do this by setting up an equation:

min{x, y} = min{2, 8} 
min{x, y-2} = min{1.6, 6.4}

Solving for y-2, we get:

y-2 = 2(x-2)/3

Plugging in the values we know:

6.4-2 = 2(x-2)/3 
4.4 = 2(x-2)/3 
x-2 = 1.65 
x = 3.65

So Bernice's new utility level of 1.6 could be achieved with earrings consumption of 3.65 at the original price of $8.

This means that Bernice's income would have to increase from $16 to maintain the same utility level after the price increase. We can find the amount of the increase by calculating the difference between Bernice's original income and the income that would give her the same utility at the new price:

EV = $16 - ($3.65 x $8) 
EV = $16 - $29.20 
EV = $-13.20

Since the equivalent variation should be positive (meaning Bernice would need additional income), we need to take the absolute value:

EV = $13.20

Therefore, the equivalent variation of the price change is $13.20 or approximately $2.91. The answer is C.

If Bernice (Whose Utility Function Is Min{x, Y}, Where X