Pablo's Utility Function Is U(x, Y)= X + 10y -

question 33

Multiple Choice

Pablo's utility function is U(x, y) = x + 10y - y²/2, where x is the number of x's he consumes per week and y is the number of y's he consumes per week.Pablo has $200 a week to spend.The price of x is $1.The price of y is currently $5 per unit.Pablo has received an invitation to join a club devoted to the consumption of y.If he joins the club, Pablo can get a discount on the purchase of y.If he belonged to the club, he could buy y for $1 a unit.How much is the most Pablo would be willing to pay to join this club?

• A)$8
• B)$28
• C)$36
• D)$56
• E)None of the above.

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