You live a fun life, consuming a yummy composite good, and a lot of cellphoneThe cell provider offers you two contracts:service!Deal #1: Up to 300 minutes per month, for a fixed fee of $20, and extra minutes for 20 cents.Deal #2: Up to 600 minutes per month, for a fixed fee of $55, and extra minutes for 15 cents.Your utility function is U = x" y"2 MUX = (1/2) x12 y2You have a budget of $100 to spend.-1/2.MUy = (1/2) x2y2a)Which plan do you choose, and what are your optimal choices of x and y?Confirm that your choice in part a) is correct by comparing the slopes of the budgetb)line and the indifference curve at the optimum.

Utility function : x1/2y1/2 Budget Constraint : Px *x + Py*y = 100 MRS = MU(x) /MU(y) MRS = y/x…

сепрпопе ervice! The cell provider offers you two contracts: Deal #1: Up to 300 minutes per month, for a fixed fee of $20, and extra minutes for 20 cents. Deal #2: Up to 600 minutes per month, for a fixed fee of $55, and extra minutes for 15 cents. 1/21/2 'our utility function is U = x2 y2 MUX =(1/2) x2y'2 MUy = (1/2) x² yl2 ou have a budget of $100 to spend. Which plan do you choose, and what are your optimal choices of x and y? Confirm that your choice in part a) is correct by comparing the slopes of the budget ine and the indifference curve at the optimum.

сепрпопе ervice! The cell provider offers you two contracts: Deal #1: Up to 300 minutes per month, for a fixed fee of $20, and extra minutes for 20 cents. Deal #2: Up to 600 minutes per month, for a fixed fee of $55, and extra minutes for 15 cents. 1/21/2 'our utility function is U = x2 y2 MUX =(1/2) x2y'2 MUy = (1/2) x² yl2 ou have a budget of $100 to spend. Which plan do you choose, and what are your optimal choices of x and y? Confirm that your choice in part a) is correct by comparing the slopes of the budget ine and the indifference curve at the optimum.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 6P

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