Herbie's Utility Function Is U(x, Y)= X + 8y -

question 4

Multiple Choice

Herbie's utility function is U(x, y) = x + 8y - 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.Herbie has $200 a week to spend.The price of x is $1.The price of y is currently $4 per unit.Herbie has received an invitation to join a club devoted to the consumption of y.If he joins the club, Herbie 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 Herbie would be willing to pay to join this club?

• A)$33
• B)$21
• C)$4.50
• D)$16.50
• E)None of the above.

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Definitions:

Excess Amortizations

Amortization expenses that exceed the norm or expectation for a particular asset, typically resulting from an aggressive estimation of the asset's useful life or value.