Mickey is considering buying a tape recorder. His utility function is U(x;y; z)=x+f(y)z:5 where x is the amount of money he spends on other goods, y is the number of tape recorders he buys, and z is the number of tapes he buys. Let f(y)=0if y<1and f(y)=8if y is greater than or equal to 1. The price of tape recorders is 20, the price of tapes is 1, and he can easily a ord to buy a tape recorder and and several tapes. Will he buy a tape recorder?
A.
He should buy a tape recorder at these prices, but if tapes were any more expensive, it would not pay to buy one.
B.
He should not buy a tape recorder.
C.
He is indifferent to buying a tape recorder or not.
D.
There is not enough information here for us to be able to tell.