economics
Suppose a very busy EMU graduate student wants to purchase a new computer. She knows that she can buy the type of computer she wants at Microchip for 1,500 TL. However, she has heard that an unknown importer is selling identical computers for 1,000 TL each. Her current income is 10,000 TL. Her utility function is measured as U(Y) = ln (Y) where Y is her income measured after buying the computer.
Suppose if she goes shopping one Saturday morning and randomly visits the shops to buy a computer she has a 30 percent probability of finding the importer that is selling the computer at the low price. Alternatively she could pay one of her unemployed cousins to search for the shop selling the computers at the low price.
What is the maximum amount that the graduate student could spend of her income to pay her cousin to find out where she can buy the cheaper computer?
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