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Paul's utility is u(c, d, h) = BC + 18d d2 h/IZS, where d is the number of hours per day that he spends driving
Paul's utility is u(c, d, h) = BC + 18d d2 h/IZS, where d is the number of hours per day that he spends driving around, It is the sum of all hours per day spent driving around by other people in his town, and c is the amount of money he has le to spend on other goods besides gasoline and auto repairs. Gas and repairs cost $0.50 per hour of driving (i.e., pa = .50). Assume pr = 1 and suppose there are 1,001 people in the town (all have the same utility mction as Paul). a. What is the optimal number of hours driving for Paul? (1 pt) b. What is h? (1 pt) c. The utility maximizing amount of driving is '? (2 pts) d. What tax on each hour of driving (i.e., adding It to the marginal cost) would lead to the utility maximizing amount of driving? (2 pts)
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