Alex,a Risk-Neutral Woman,is Looking for an Apartment

question 149

Multiple Choice

Alex,a risk-neutral woman,is looking for an apartment.The distribution of apartments is as follows: 70% rent for $700 per month,20% rent for $600 per month,and 10% rent for $500 per month.All else constant,Alex would prefer an apartment that rents for $500.Alex's first search costs $10,and her cost of searching subsequently rises by $10 with each search.
-Refer to the information above.Suppose the cost of searching for Alex changes from $10 per search to $20 per search.Her optimal number of searches now is

• A) 5.
• B) 4.
• C) 3.
• D) 2.
• E) 1.

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Definitions:

Taxpayer

An individual or entity that is obligated to make payments to governmental authorities based on income earned or goods and services provided.

Dependent Child

A dependent child is an individual, typically under the age of 19 (or 24 if a student), who is financially supported by a taxpayer and qualifies them to claim dependent-related tax benefits.

Wages

A fixed regular payment, typically calculated on an hourly, daily, or piecemeal basis, made by an employer to an employee, especially to a manual or unskilled worker.

Tax Liability

The total amount of tax owed by an individual, corporation, or other entity to a taxing authority, such as the IRS or state tax agency.