Jan's Utility Function Is C - H², Where C Is

question 7

Multiple Choice

Jan's utility function is C - H², where C is consumption and H is hours worked per day. She can work in the city for 8 hours per day, earning $100 a day. Alternatively, she can rent a small farm from Mr. Porksniffer. If she rents the farm, she can work as many hours a day as she wishes. If she works H hours per day, she can sell her crops for a total of $20H per day, but she must pay Mr. Porksniffer an annual rent of $R. Mr. Porksniffer wants to charge the highest rent $R that he can and still be able to have Jan rent from him. What is the highest rent he can charge? A penny less than

• A) $100 per day.
• B) $64 per day.
• C) $60 per day.
• D) $50 per day.
• E) $36 per day.

---

Definitions:

Long-Term Valuation

Assessing the worth or potential future value of assets, investments, or companies over an extended period.

Profitability

The ability of a company to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Transactional Leaders

Leaders who focus on the role of supervision, organization, and group performance; they are concerned with status quo and day-to-day progress toward goals, often employing a reward-punishment system.

Employee Satisfaction

The level of contentment employees feel regarding their job and workplace conditions, which can impact productivity and loyalty.