You have k20per week to spend and two possible uses for this money,:telephoning friends back home and drinking coffee. Each hour of phoning costs k2 and each cup of coffee costs k1. Your utility functions U(X,Y)=XY,where X is the hours of phoning you do and Y the number of cups of coffee you drink. Now suppose the price of telephone calls drops to k1 per hour. What are your optimal choices? What is the resulting utility level
You have k20per week to spend and two possible uses for this money,:telephoning friends back home and drinking coffee. Each hour of phoning costs k2 and each cup of coffee costs k1. Your utility functions U(X,Y)=XY,where X is the hours of phoning you do and Y the number of cups of coffee you drink. Now suppose the price of telephone calls drops to k1 per hour. What are your optimal choices? What is the resulting utility level
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You have k20per week to spend and two possible uses for this money,:telephoning friends back home and drinking coffee. Each hour of phoning costs k2 and each cup of coffee costs k1. Your utility functions U(X,Y)=XY,where X is the hours of phoning you do and Y the number of cups of coffee you drink. Now suppose the price of telephone calls drops to k1 per hour. What are your optimal choices? What is the resulting utility level
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