Given the expression min _(x,y) expenditure P_x x + P_yy subject to: U(x, y) = U*, the endogenous variables are A) x and P_x. B) only U*. C) x and y. D) P_x and P_y.

Question

Quizplus · Accepted Answer

The expression given is related to the expenditure on two goods, x and y, subject to a utility constraint U(x, y) = U*. Therefore, the endogenous variables are the quantities of x and y that maximize the utility subject to the budget constraint. The two price variables, P_x and P_y, are exogenous and represent the prices of the two goods. Therefore, the correct answer is C, which includes the endogenous variables x and y.

Given the Expression Min (x,y) Expenditure Px X + Pyy

Given the Expression Min _(x,y) Expenditure P_x X + P_yy