Round Trips Total Utility Phone Minutes Total Utility 80 20 200 150 40 380 210 60 540 260 80 680 300 100 800 330 120 900 7 200 140 980 8. 180 160 1040 160 180 1080 10 140 200 1100 Table 6.6 1. 2. st LO
Take Jeremy’s total utility information in Exercise 6.1, and use the
6.1Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call
her on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasoline
money. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a
handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in
Table 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)
and identify his utility-maximizing point.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps