0
   

Question: budget constraint, utility function, better off

 
 
Reply Mon 20 Mar, 2017 02:10 pm

Please help Smile
David and Ella are planning a holiday together to Hawaii. David says that he can only enjoy a day of sightseeing if it is followed by a day on the beach, and he can only enjoy a day on the beach if it follows a day of sightseeing. Ella says that one day of sightseeing is equally good to one day on the beach. The price of one day of sightseeing is €20 and the price of one day on the beach is €10. Their joint budget is €240.
a. If they end up choosing to spend 7 days of sightseeing and 10 days on the beach, does there exist another bundle that makes both better off?
b. If they end up choosing 9 days of sightseeing and 6 days on the beach, does there exist another bundle that makes both better off?
c. Suppose that Ella replaced David with Freddi. Freddi says that one day of sightseeing is equally good to four days on the beach. Answer parts c. and d. for Ella and Freddi.
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Question • Score: 0 • Views: 281 • Replies: 1
No top replies

 
Romeron
 
  0  
Reply Tue 21 Mar, 2017 07:50 am
@PaulinaYaneva,
A)The total cost for 7 days of sightseeing and 10 days of beach is equal to 240.It matchs their budget.
B)The total cost of 9 days of sightseeing and 6 days of beach is also 240.
C)The third question is nonsense because only couples will go for vaction it is not possible to replace loved ones.
Sightseeing is much better than counting waves whole day.
0 Replies
 
 

 
  1. Forums
  2. » Question: budget constraint, utility function, better off
Copyright © 2024 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.02 seconds on 04/28/2024 at 09:20:23