Suppose that Central High School has preferences that can be represented by the utility function U(C,X) = CX2. Let us try to determine how the various plans described in the last problem will affect the amount that C.H.S. spends on computers.
(a) If the state adopts none of the new plans, find the expenditure on computers that maximizes the district’s utility subject to its budget constraint. ________.
(b) If plan A is adopted, find the expenditure on computers that maximizes the district’s utility subject to its budget constraint. ________.
(c) On your graph, sketch the indifference curve that passes through the point _______ if plan B is adopted. At this point, which is steeper, the indifference curve or the budget line? The budget line.
(d) If plan B is adopted, find the expenditure on computers that maximizes the district’s utility subject to its budget constraint. __________.
(e) If plan C is adopted, find the expenditure on computers that maximizes the district’s utility subject to its budget constraint. ______.
(f) If plan D is adopted, find the expenditure on computers that maximizes the district’s utility subject to its budget constraint. _________.