Problem 1. You have two midterm exams coming up and have to decide how to allocate your study time. After eating, sleeping, exercising, and maintaining some human contact, you still have 15 hours each day to study for your exams!! You have figured out that your GPA (G) from your two courses, economics and sociology, takes the form 1 = ÷(2ve+ vs) 8. where e is the number of hours per day spent studying economics and s is the number of hours per day spent studying sociology. You only care about your GPA. (a) What is your optimal allocation of study time? (b) If you follow this strategy, what will your GPA be? (c) What is the shadow value, measured in GPA units, of the study time? Discuss. [Hint: The optimal value of the Lagrange multiplier is the shadow value of the constraint.]

Problem 1. You have two midterm exams coming up and have to decide how to allocate your study time. After eating, sleeping, exercising, and maintaining some human contact, you still have 15 hours each day to study for your exams!! You have figured out that your GPA (G) from your two courses, economics and sociology, takes the form 1 = ÷(2ve+ vs) 8. where e is the number of hours per day spent studying economics and s is the number of hours per day spent studying sociology. You only care about your GPA. (a) What is your optimal allocation of study time? (b) If you follow this strategy, what will your GPA be? (c) What is the shadow value, measured in GPA units, of the study time? Discuss. [Hint: The optimal value of the Lagrange multiplier is the shadow value of the constraint.]

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.3P

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