Question

Nancy Lerner is taking Professor Stern's economics course. She will take two examinations on the course, and her score for the course is the minimum of the scores that she gets on the two exams. Nancy wants to get the highest possible score for the course.

(a) Write a utility function that represents Nancy's preferences over alternative combinations of test scores x₁ and x₂ respectively.

U(x₁, x₂) =

Answer 1

solution: sine X1 and X2 are scores that Nancy gets in two exams. Even if she gets high marks in one of the exams, only minimum of the scores will be counted as her score for the course. Hence U (*),X2) = min{x1, x2}