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Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, tells their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would even result in tax being imposed twice.
What type of arrangement did Wally propose with his suggestion that they share control of the business and split profits equally, not bothering with a written agreement?
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Originally, px = 1, py = 2 and m = 1. What bundle does the consumer choose, and what is his utility from this bundle? The price of good x then rises to 3. What bundle does the consumer choose after the price change, and what is his utility from this..
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