Question: Supergo is the only convenient gas station for Ryan, whose preferences are the same as in the previous problem. While Supergo sells gas to the

Supergo is the only convenient gas station for Ryan, whose preferences are the same as in the previous problem. While Supergo sells gas to the general public for $4 per gallon, customers can also pay a monthly fee of $500 to join Supergo's "Gasguzzlers" club, which entitles them to buy gas for $2 per gallon. Food costs $4 per pound, and Ryan's monthly income is $1,200. Draw Ryan's budget set. What is Ryan's best choice? (Be careful: Interior solutions that satisfy the tangency condition need not be best choices for Ryan's budget constraint.) What is the maximum monthly fee Supergo could charge at which Ryan would join the Gasguzzlers club?

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If Ryan joins the club what is his best choices would be Food 75 pounds Gasoline 300 gallons Ryans utility if he joins the club is 3175653 His utility ... View full answer

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