In Problem 3, Suppose Harry, a Typical Citizen, Has the Utility

question 11

Multiple Choice

In Problem 3, suppose Harry, a typical citizen, has the utility function U(m, d, h) = m + 7d² - d² - 2h, where d is the number of hours per day that he spends driving around, h is the average number of hours per day spent driving around by other people in his home town, and m is the amount of money he has left to spend on other stuff besides gasoline and auto repairs. Gas and auto repairs cost $1 per hour of driving. If each citizen believes that their own driving will not affect the amount of driving done by others, they will all drive D₁ hours per day. If all citizens drive to maximize the utility of a typical citizen, they will all drive D₂ hours per day, where

• A) D₁ = 6 and D₂ = 1.
• B) D₁ = 5 and D₂ = 3.
• C) D₁ = D₂ = 3.
• D) D₁ = 3 and D₂ = 2.
• E) D₁ = 3 and D₂ = 0.

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Definitions:

Small Business Ownership

The operation and responsibilities of running a small-scale business, usually characterized by limited revenue and personnel numbers.

Financing

is the process of sourcing capital or funds to finance the operations, projects, or investments of an individual, organization, or government.

Limited Liability Corporation

A hybrid business form combining the advantages of the sole proprietorship, partnership, and corporation.

Tax Purposes

The reasons or objectives related to the calculation, payment, or management of taxes as required by law.