Kevin likes to ski a lot. His utility function for days of skiing (s) and other...

 

Transcribed Image Text:

Kevin likes to ski a lot. His utility function for days of skiing (s) and other goods (x) is U=2xs+2x, so his marginal utility of skking is U_s=2x and his utility for other goods is U_x=2s+2. The price of ski lift ticket is p_s=100, and you can use a price of p_x=1 for other goods. Assume that Kevin has $1100 to allocate to skiing and goods. Which of the following statements are true? Select all that apply: a. Assuming Kevin maximizes his utility, he will ski 5 days per year. b. Kevin would be made better off by a buy-one, get-one-free deal. c. If he were offered a deal to get 5 days of skiing for the price of 3, he would still ski 5 days but he'd be happier. Od. If he were offered a deal to get 5 days of skiing for the price of 3, he would ski 6 days and he'd be happier. Oe. The increased price of gas increases his cost of ski days to increase to p_s=120 and has cut his disposable income to $1080. He would still want to buy 5 days of skiing for the price of 3 ($360). cross out cross out cross out cross out cross out Kevin likes to ski a lot. His utility function for days of skiing (s) and other goods (x) is U=2xs+2x, so his marginal utility of skking is U_s=2x and his utility for other goods is U_x=2s+2. The price of ski lift ticket is p_s=100, and you can use a price of p_x=1 for other goods. Assume that Kevin has $1100 to allocate to skiing and goods. Which of the following statements are true? Select all that apply: a. Assuming Kevin maximizes his utility, he will ski 5 days per year. b. Kevin would be made better off by a buy-one, get-one-free deal. c. If he were offered a deal to get 5 days of skiing for the price of 3, he would still ski 5 days but he'd be happier. Od. If he were offered a deal to get 5 days of skiing for the price of 3, he would ski 6 days and he'd be happier. Oe. The increased price of gas increases his cost of ski days to increase to p_s=120 and has cut his disposable income to $1080. He would still want to buy 5 days of skiing for the price of 3 ($360). cross out cross out cross out cross out cross out

Answer rating: 100% (QA)

Answer d If he were offered a deal to get 5 days of skiing for the price of 3 he would ... View the full answer