Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C) = FC. In addition, the price of food is $2 per unit, the price of clothing is $7 per unit, and Julio's weekly income is $50. What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Explain. Julio's marginal rate of substitution equals A. 3.50, which is the price of clothing divided by the price of food. B. 0.29, which is the price of food divided by the price of clothing. O C. 0.29, which is the price of clothing divided by the price of food. O D. 3.50, which is (minus) the slope of the budget line. O E. 3.50, which is Julio's level of satisfaction.
Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C) = FC. In addition, the price of food is $2 per unit, the price of clothing is $7 per unit, and Julio's weekly income is $50. What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Explain. Julio's marginal rate of substitution equals A. 3.50, which is the price of clothing divided by the price of food. B. 0.29, which is the price of food divided by the price of clothing. O C. 0.29, which is the price of clothing divided by the price of food. O D. 3.50, which is (minus) the slope of the budget line. O E. 3.50, which is Julio's level of satisfaction.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 11SQ
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Transcribed Image Text:Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C) = FC. In addition, the price of
food is $2 per unit, the price of clothing is $7 per unit, and Julio's weekly income is $50.
What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Explain.
Julio's marginal rate of substitution equals
A. 3.50, which is the price of clothing divided by the price of food.
B. 0.29, which is the price of food divided by the price of clothing.
O C. 0.29, which is the price of clothing divided by the price of food.
D. 3.50, which is (minus) the slope of the budget line.
O E. 3.50, which is Julio's level of satisfaction.
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