Ethel is trying to decide whether to have 0 cars, 1 car, or 2 cars.If x is the number of cars she has and y is the amount of money she has per year to spend on other stuff, Ethel's utility function is U(x, y), where U(0, y)= y^1/2, U(1, y)=0 (15/14)y^1/2, and U(2, y)= (10/9)y^1/2.Suppose that it costs $2,000 a year to have 1 car and $4,000 a year to have 2 cars.Ethel finds that the right thing to do depends on her income.
a.What is her willingness to pay for 1 car if her income is M?
b.What is the lowest income at which she would have a car?
c.What is the lowest income at which she would have 2 cars?

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The Answer of Ethel is trying to decide whether to have 0 cars, 1 car, or 2 cars.If x is the number of cars she has and y is the amount of money she has per year to spend on other stuff, Ethel's utility function is U(x, y), where U(0, y)= y^1/2, U(1, y)=0 (15/14)y^1/2, and U(2, y)= (10/9)y^1/2.Suppose that it costs $2,000 a year to have 1 car and $4,000 a year to have 2 cars.Ethel finds that the right thing to do depends on her income. a.What is her willingness to pay for 1 car if her income is M? b.What is the lowest income at which she would have a car? c.What is the lowest income at which she would have 2 cars?

Ethel Is Trying to Decide Whether to Have 0 Cars