2.1. In the readings we saw that Internet communication (such as email) consumed on average 57% of the time spent online and Internet browsing (such as visiting web sites) used the other 43%. We also saw that the average online user in the U.S. spent approximately 3 hours per day using the Net. Assume the incremental monetary costs of using the Net are negligible and can be taken as zero. Furthermore, assume that an average Internet user is maximizing his or her utility with this time allocation.
a. Let the utility of each of the two Internet uses be given by:
Utility of online usage type i = , where t stands for the time spent on an activity. What is the numerical value of the ratio of for a utility maximizer?
b. Keeping all the assumptions above, what is the ratio of the utility of communication to the utility of browsing for this average user? How might this reveal itself in surveys about their favorite online activities?
c. As part of a research project, you collect a time diary every ten minutes for a full day. Do the earlier answers suggest a methodology you could use to estimate your utility function for different types of online usage? Would your estimates improve if the time diary continued for a full month?
Internet communication (such as email) is featured.