Suppose the consumer's preferences over consumption bundles (X,Y) can be repre- sented by the utility function U(X,Y) = min{3X, 5Y}. Which of the following ex- pressions gives the indirect utility function that corresponds to this utility function? (Recall that the indirect utility function is a function of the price of X, PX, the price of Y, py, and the income, I, of the consumer.) (a) V (px,py, I) (b) V (px, py, I) = = 31 PX (d) V (px,py, I) = 15I 5px+3py (c) V (px, py, 1) = 15px py I I) 51 PY

Suppose the consumer's preferences over consumption bundles (X,Y) can be repre- sented by the utility function U(X,Y) = min{3X, 5Y}. Which of the following ex- pressions gives the indirect utility function that corresponds to this utility function? (Recall that the indirect utility function is a function of the price of X, PX, the price of Y, py, and the income, I, of the consumer.) (a) V (px,py, I) (b) V (px, py, I) = = 31 PX (d) V (px,py, I) = 15I 5px+3py (c) V (px, py, 1) = 15px py I I) 51 PY

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Suppose the consumer's preferences over consumption bundles (X, Y) can be repre-
sented by the utility function U(X,Y) = min{3X, 5Y}. Which of the following ex-
pressions gives the indirect utility function that corresponds to this utility function?
(Recall that the indirect utility function is a function of the price of X, px, the price
of Y, py, and the income, I, of the consumer.)
(a) V(px, py, I)
=
(b) V(px, py, I)
15I
5px+3py
(c) V (px, py, 1) = 15pypy 1
=
31
PX
(d) V (px, px, 1) =
=
51
PY

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