Elizabeth Swan wants to switch her cellphone carrier to another carrier. Pirates

Question

Elizabeth Swan wants to switch her cellphone carrier to another carrier. PiratesMobile offers a great plan with a price of $8 per GB data usage. Elizabeth has a monthly income of $270, and her utility function is U=x1/2g1/2, where x is money spending on other goods and g is the amount of GB data usage.

a. Calculate the MRS =MUx/MUg of Elizabeth’s utility function. x/

_g  

b. Write down Elizabeth's budget constraint. (Hint: the price of 'money" is $1) _x + 8g = _

c. If Elizabeth chooses PiratesMobile’s plan, at her optimal consumption bundle, she should use _GB data.

Explanation / Answer

Household production refers to the production which is produced at home with help of family members. No direct labor cost is paid here. Family may use intermediary products to create final production. Usually, household production is carried out for self consumption. Production is is done on smaller scale.

On other hand, Housework means carrying daily work as home such cleaning, making bed, cooking act. housework is not part of GDP. it is difficult to calculate economic values of services provided at home.

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