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Univ. has $60,000 to spend on computers and other stuff, so its budget equation is C+X =60, 000, where C is expenditure on computers and
Univ. has $60,000 to spend on computers and other stuff, so its budget equation is C+X =60, 000, where C is expenditure on computers and X is expenditure on other things. The Korean Government wants to encourage \"computer literacy\" in the universities in Korea. The following plan has been proposed. Plan: This plan would give a grant of $10,000 to each university in Korea that the university could spend as it wished. Suppose that Univ. has preferences that can be represented by the utility function U(C,X) = CXQ. (a) If the Korean Government doesn't adopt the plan, nd the expenditure on computers that maximizes the utility subject to its budget constraint. (b) If the plan is adopted, nd the expenditure on computers that maximizes the utility subject to its budget constraint
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