television. Her preferences correspond to the utility function U(A,D) = 2A + 4√D, where A
stands for the number of hours she watches American Idol and D is the number of hours she
watches Desperate Housewives.
a. How would Harriet rank the following alternatives: 4 hours of American Idol and 2 hours
of Desperate Housewives, 2 hours of American Idol and 4 hours of Desperate Housewives
and 3 hours of American Idol and 3 hours of Desperate Housewives?
b. Suppose that one week, Desperate Housewives is not shown, but there is a two-hour
American Idol special (instead of the usual one-hour program). Is Harriet better off or worse
c. Would Harriet's preferences change if her utility function was expressed as U(A,D) = 2A +
4√D+6? Why or why not?
4. Nicole's income is $1,000 per month. She spends all of it on shoes (S) and books
(B). Shoes cost $50 and books cost $25. Her marginal rate of substitution for shoes with
books is MRSSB = 2B/3S. Illustrate her utility-maximizing combination of shoes and books
and draw her price-consumption curve if the price of books rises to $30
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