Richard's preferences over chocolate, c, and money, m, can be represented by the utility function: u(c,m) = 6c + m + 6\mu (c - r_c) + \mu (m - r_m).

where r_c is his chocolate reference point, r_m is his money reference point, and the function is defined as: \mu(x) = { x, x>= 0 ; 3x/2, x

1. If his reference point is the status quo (that is, his initial endowment), what is the maximum price Richard would be willing to pay to buy the chocolate?
2. If his reference point is the status quo, what is the minimum price Richard would be willing to accept to sell a chocolate he already owned?
3. If his reference point is the status quo, what is the minimum amount of money Richard would be willing to accept instead of receiving a chocolate (that he did not already own)? In other words, how much money would Richard demand to compensate for not accepting a chocolate?

Question 4. {25%} Richard's preferences mrer chocolate, c, and money, in, can he represented by the utility function u{c,m) =66+m+6y{crc}+y{m rm) where re is his chocolate reference point, rm is his money reference point, and the function is denedas :1: 220 #(r}={ %1 14,0 1. If his reference point is the status quo [that is, his initial endowment), what is the maximum price Richard would be willing to pay to buy a chocolate? 2. If his reference point is the status quo, what is the minimum price Richard would be willing to accept to sell a chocolate he already owned? 3 3. If his reference point is the status quo, what is the minimum amount of money Richard would be willing to accept instead of receng a chocolate {that he did not already own)? In other words, if Richard were a \"chooser,\" how much money would he demand to compensate for not accepting a chocolate