Joanne sleeps exactly 8 hours per day, and she devotes the remaining 16 hours to
work (H), golf (x₁)and computer games (x₂). She can work as many hours as she wants at a wage rate of $w per hour. The money price of a round of golf is p1 and the time price is 4 hours. Each computer game takes 2 hours to play and Joanne downloads the game from the internet for free (p₂= 0). Her utility function is
U(x₁,x₂)= x₁x₂
i)Find the utility maximizing values of x₁and x₂as functions of w and p₁.
ii)When w = $10 per hour and p₁= $40 how many rounds of golf is Joanne going to play? How many computer games? How many hours is she going to work?

Question

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The Answer of Joanne sleeps exactly 8 hours per day, and she devotes the remaining 16 hours to work (H), golf (x₁)and computer games (x₂). She can work as many hours as she wants at a wage rate of $w per hour. The money price of a round of golf is p1 and the time price is 4 hours. Each computer game takes 2 hours to play and Joanne downloads the game from the internet for free (p₂= 0). Her utility function is U(x₁,x₂)= x₁x₂ i)Find the utility maximizing values of x₁and x₂as functions of w and p₁. ii)When w = $10 per hour and p₁= $40 how many rounds of golf is Joanne going to play? How many computer games? How many hours is she going to work?

Joanne Sleeps Exactly 8 Hours Per Day, and She Devotes