Under the first plan he pays 0.25 per minute of connect, Ask an Expert

Economics

David has $100 per month to allocate between Internet connect time, C and food F. His preferences are given by the utility function U = CF. The price of food is $1. An Internet Service Provider provides two billing options. Under the first plan he pays $0.25 per minute of connect time. Under the second plan, he pays a lump sum of $30 per month and only $0.10 per minute of connect time. Determine David's optimal consumption bundle and his choice between the two plans.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9280772

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