Jan's Utility Function Is C - H², Where C Is

question 6

Multiple Choice

Jan's utility function is C - H², where C is consumption and H is hours worked per day.She can work in the city for 8 hours per day, earning $100 a day.Alternatively, she can rent a small farm from Mr.Porksniffer.If she rents the farm, she can work as many hours a day as she wishes.If she works H hours per day, she can sell her crops for a total of $20H per day, but she must pay Mr.Porksniffer an annual rent of $R.Mr.Porksniffer wants to charge the highest rent $R that he can and still be able to have Jan rent from him.What is the highest rent he can charge? A penny less than

• A)$100 per day.
• B)$64 per day.
• C)$60 per day.
• D)$50 per day.
• E)$36 per day.

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Definitions:

Investment

The action of allocating resources, usually money, with the expectation of generating an income or profit.

Yields

The income return on an investment, such as the interest or dividends received from holding a particular security.

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Budget Approval

The formal process of validating a financial plan that allocates resources for specific activities or periods.