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Paul Movie derives utility only from iTunes Songs (S) and DVDs (D). His utility function is given by

U = (SD)^1/2

Suppose Paul's roomate object to his music choices and require him only to buy equal numbers of songs and DVDs. Furthermore, suppose songs cost $11.8, DVDs cost $13.9 and Paul has an income of $220.8. If Paul's roomates wish Paul to accept their restrictions voluntarily, how much extra income would they have to give him to do so?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M963450

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