Suppose Lawrence, a Typical Citizen, Has the Utility Function U(m

question 6

Multiple Choice

suppose Lawrence, a typical citizen, has the utility function U(m, d, h) = m + 7d² - d² - 4h, 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 = 5 and D₂ = 2.
• B)D₁ = D₂ = 3.
• C)D₁ = 3 and D₂ = 1.
• D)D₁ = 6 and D₂ = 0.
• E)D₁ = 3 and D₂ = 0.

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Definitions:

Stockholders' Equity

Stockholders' Equity represents the owners' claim after all liabilities have been deducted from total assets. It's also known as shareholders' equity or equity.

Par Value

A nominal or face value assigned to a share of stock by the company's charter, unrelated to the market value.

Paid-In Capital

The amount of money that a company has received from shareholders in exchange for stock, exceeding the par value of the shares.

Common Stock

A type of equity security that represents ownership in a corporation and entitles holders to vote on corporate matters and receive dividends.