Charlie Can Work as Many Hours as He Wishes at a Local

question 70

Multiple Choice

Charlie can work as many hours as he wishes at a local fast-food restaurant for a wage of $4 per hour.Charlie also does standup comedy.Since Charlie lives in a quiet, rather solemn Midwestern town, he is the town's only comedian and has a local monopoly for standup comedy.The demand for comedy is Q = 40 - P, where Q is the number of hours of comedy performed per week and P is the price charged per hour of comedy.When Charlie maximizes his utility, he spends at least 1 hour per week working at the restaurant and he gets at least 1 hour of leisure time.His utility depends only on income and leisure.How many hours per week does he perform standup comedy?

• A)36
• B)40
• C)18
• D)20
• E)We can't tell without knowing his utility function.

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Definitions:

Cease-and-desist Order

A legal order issued by a government agency or court to stop an activity or behavior that is alleged to be illegal.

Federal Trade Commission

A U.S. federal agency aimed at preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education.

Total Price

The complete cost of a good or service, including all taxes, fees, and additional charges.

Federal Trade Commission

A U.S. federal agency established to prevent fraudulent, deceptive, and unfair business practices.