Asked by bentley romanski on May 04, 2024
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Robinson Crusoe has exactly 12 hours per day to spend gathering coconuts or catching fish.He can catch 3 fish per hour or he can pick 12 coconuts per hour.His utility function is U(F, C) FC, where F is his consumption of fish and C is his consumption of coconuts.If he allocates his time in the best possible way between catching fish and picking coconuts, his consumption will be the same as it would be if he could buy fish and coconuts in a competitive market where the price of coconuts is $1, his income is
A) $144 and the price of fish is $4.
B) $144 and the price of fish is $.33.
C) $36 and the price of fish is $3.
D) $180 and the price of fish is $3.
E) $90 and the price of fish is $.33.
Utility Function
A formula that represents a consumer’s preference ranking for different combinations of goods or services, indicating the total satisfaction achieved from consumption.
Competitive Market
A market structure characterized by a large number of buyers and sellers, with no single participant able to significantly influence the market price.
Coconuts
In economic models or exercises, often used as a commodity or goods to demonstrate concepts of trade, barter, or economic principles more simplistically.
- Employ the theory of utility maximization to judiciously allocate resources among different alternatives.
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Learning Objectives
- Employ the theory of utility maximization to judiciously allocate resources among different alternatives.
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