Identify utility-maximizing point

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Reference no: EM133094422

Question: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasoline money.

He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes.

Using the values given in the table below, figure out the points on Jeremy's consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.

Round Trips

Total Utility

Phone Minutes

Total Utility

0

0

0

0

1

80

20

200

2

150

40

380

3

210

60

540

4

260

80

680

5

300

100

800

900

6

330

120

7

200

140

980

8

180

160

1040

9

160

180

1080

10

140

200

1100

Reference no: EM133094422

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