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In: Economics

Suppose you receive utility ?(?, ?) = 8? 1/2 + ? from ? Instagram “likes” and...

Suppose you receive utility ?(?, ?) = 8? 1/2 + ? from ? Instagram “likes” and l minutes worked. Assume it takes 2 minutes to find an Instagram post to like, and you have 60 minutes to spend on work or Instagram. Assume your goal is to maximize your utility. a) How many Instagram posts will you like? How many minutes will you work? b) What is your total utility if you make the optimal choices above? c) Suppose the demand function for Instagram likes is ? = 16?−2, where ? is the opportunity cost (time spent) for each like. Suppose the opportunity cost falls from 2 minutes to 1 minute because Instagram improves their algorithms and makes it easier for you to find posts. What is the most likely demand function after this change: ? = 16?−2, ? = 12?−2, or ? = 20?−2? Explain your reasoning.

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Rahul Sunny answered 2 years ago
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