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  3. 4 kate spends all her money on airtime for her...

Question: 4 kate spends all her money on airtime for her...

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4. Kate spends all her money on airtime for her mobile phone and gasoline for her car Well use the symbols W (for wireless) to stand for the number of minutes she spends talking on her mobile phone and G to stand for the gallons of gasoline she uses during a week. Her utility is given by G/8+ vW. The price of gasoline, Po is $1 per gallon, the price of mobile minutes, Pw, is $0.50 per minute, and Kate can spend up to $20 per week. (a) What is Kates marginal utility of gasoline? (b) What is Kates marginal utility of wireless phone? (c) What is Kates MRS for gasoline with wireless phone? (d) What is Kates optimal affordable choice? (e) How utility does she derive from the optimal utility choice!? (f) Draw to scale Kates budget line, the optimal affordable choice, the indifference curve passing through the optimal affordable choice.

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