Holly consumes only goods X and Y.Her income is $500 and her utility function is U(x, y) = max{x, y}, where x is the number of units of X she consumes and y is the number of units of Y she consumes.The price of good Y is 1.The price of good X used to be 1/3 but is now 2.The equivalent variation of this price change for Holly is

A) $111.11.
B) $1,566.67.
C) $1,000.
D) $333.33.
E) None of the above.

Utility Function

A mathematical representation of how different bundles of goods are ranked according to their utility or satisfaction provided to the consumer.

Equivalent Variation

A measure in economics that indicates the amount of money a consumer would need to reach their initial utility level after a price change.

Price Change

A variation in the cost of goods or services over time, which can be an increase or decrease.