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

Kinko's utility function is based on the minimum of {7x, 3x + 12y}. For Kinko to maximize utility, the two expressions inside the min{} function should be equal, i.e., 7x = 3x + 12y. Solving for y in terms of x gives y = (7x - 3x)/12 = x/3, indicating Kinko would demand 3 times as many whips as leather jackets.

Where X Is Whips and Y Is Leather Jackets, If