Question
Pablo's utility function is U(x,y)= x+10y- y2/2, where x is the number of x's he consumes per week and y is the number of y's
Pablo's utility function is U(x,y)= x+10y- y2/2, where x is the number of x's he consumes per week and y is the number of y's he consumes per week. Pablo has $200 a week to spend. The price of x is $1. The price ofy is currently $5 per unit. Pablo has received an invitation to join a club devoted to the consumption of y. If he joins the club, Pablo can get a discount on the purchase of y. If he belonged to the club, he could buy y for $1 a unit. How much is the most Pablo would be willing to pay to join this club?
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Mathematical Applications for the Management Life and Social Sciences
Authors: Ronald J. Harshbarger, James J. Reynolds
11th edition
9781337032247, 9781305465183, 1305108043, 1337032247, 1305465180, 978-1305108042
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