Charlie's Utility Is U(c, D, H)= 4c + 10d -

question 16

Multiple Choice

Charlie's utility is U(c, d, h) = 4c + 10d - d ² - 4h, where d is the number of hours per day that he spends driving around, h is the number of hours per day spent driving around by other people in his home town, and c is the amount of money he has left to spend on other stuff besides gasoline and auto repairs.Gas and auto repairs cost $.50 per hour of driving.All the people in Charlie's home town have the same tastes.If each citizen believes that his own driving will not affect the amount of driving done by others, they will all drive D₁ hours per day.If they are all drive the same amount, they would all be best off if each drove D₂ hours per day, where

• A)D₁ = 6 and D₂ = 3.
• B)D₁ = 7 and D₂ = 1.
• C)D₁ = D₂ = 4.
• D)D₁ = 4 and D₂ = 2.
• E)D₁ = 4 and D₂ = 0.

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Definitions:

Cash Disbursements

Outgoing payments made by a business, often documented in a cash disbursement journal, including expenses, creditor payments, and other financial outflows.

Cost of Goods Sold

Cost of goods sold (COGS) represents the direct costs attributable to the production of goods sold by a company, including materials and labor.

Merchandise Inventories

Goods or products that a company holds for the purpose of sale to customers in the ordinary course of business.

Sales Budget

A detailed plan that estimates future sales, usually expressed in both units and dollars, for a specific period.