Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your sweetheart Kris (Kristopher or Kristine as you prefer) enjoys two kinds of dates: a one-hour coffee rendezvous at Aromas (P A = $12), and

Your sweetheart Kris (Kristopher or Kristine as you prefer) enjoys two kinds of dates: a one-hour coffee rendezvous at Aromas (PA= $12), and going off campus for dinner (PD= $24).Kris' utility function is U = (1/2)ln(A) + (1/3)ln(D).Your job is to figure out how to allocate this semester's$480 love budgetbetween these two kinds of dates in a way that will maximize Kris' utility.

In your graphs and calculations, put A on the X-axis.

Type the combination of A and D will maximize Kris' utility, given the budget the two of you have to spend here.

In your written work,draw a graphthat shows the budget constraint, an indifference curve that passes through the suboptimal bundle from part b), and an indifference curve that passes through your optimal bundle.As before, be sure to label all the interesting points: intercepts, intersections, etc.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurship

Authors: Andrew Zacharakis, William D Bygrave

5th Edition

1119563097, 9781119563099

More Books

Students also viewed these Economics questions