Asked by
jhamaela marco
on Dec 01, 2024
Verified
Mike's utility function is U(c, d, h) = 8c + 12d - d2 - 6h, where d is the number of hours per day that he spends driving around, h is the average number of hours per day spent driving around by other citizens of his town, and c is the amount of money he has to spend on other things than gasoline and auto repairs.There are 1,001 identical citizens in Mike's home town.Mike's expenses for gasoline and auto repairs amount to $.50 per hour for the time he spends driving.If Mike believes that his amount of driving won't affect the amount that others drive, how many hours per day will he choose to drive?
A) 4
B) 6
C) 8
D) 2
E) 1
Utility Function
A mathematical representation that shows the satisfaction or utility a consumer derives from a set of goods and services.
- Calculate the socially optimal levels of production or consumption in the presence of externalities.
Verified Answer
LG
Learning Objectives
- Calculate the socially optimal levels of production or consumption in the presence of externalities.