Marbella has 101 residents.All wear the same fancy clothes and each has the same utility function, u(m, b, B)= m + 14b - b² - B/50, where m is the amount of macaroni (in kilograms)that he or she eats per day, b is the number of hours that he or she spends on the beach per day, and B is the total number of person-hours spent per day on the beach by other residents of Marbella.Each has an income of $10 per day and macaroni costs $1 per kilogram.The city council is considering a law that would limit the amount of time that any person can spend on the beach.How many hours per day should they allow in order to maximize the utility of a typical Marbellite? A)6 B)9 C)10 D)7 E)They could not possibly be made better off by legislation that limits their freedom to choose.

Question

Quizplus · Accepted Answer

The utility function provided suggests that the utility of a typical Marbellite depends on their consumption of macaroni (m), their personal time spent on the beach (b), and the total time spent on the beach by others (B). Given that each resident has the same utility function and income, and considering the cost of macaroni, the optimal allocation of time and resources can be calculated to maximize utility. The choice of 6 hours maximizes utility by balancing the benefits of personal beach time, the utility from others' beach time, and the consumption of macaroni within their budget constraints.

Marbella Has 101 Residents