Seignior Cruz is married to a rich widow and lives a life of luxury and leisure! He devotes 40 hours every week to golf (G) and curling (C) from which he derives enjoyment according to the utility function:
U(G,C) = G0.5C0.5
It takes Seignior Cruz 4 hours to play a round of golf and 1 hour to play a game of curling.
(a) How many rounds of golf and games of curling will Seignior Cruz play in a week?
(b) Give an economic interpretation for the value of the Lagrangian Multiplier.
(c) By approximately how much will Seignior Cruz's utility change if, starting immediately, his wife insists that he spends one hour less on athletic activities every week? (We are making the bold assumption here that playing golf or curling is athletic!)