Monica consumes only goods A and B. Suppose that her marginal utility from consuming good A is equal to 1/A, and her marginal utility from consuming good B is 1/B. Assume the price of A is $0.50, the price of B is $4.00, and Monica's income is $120.00. Assume A is on the x axis. At a bundle, A=1, B=2, Monica's MRS is 2 v. At this bundle, Monica should Monica should optimally buy 120 v units of good A and 15 v units of good B.
Monica consumes only goods A and B. Suppose that her marginal utility from consuming good A is equal to 1/A, and her marginal utility from consuming good B is 1/B. Assume the price of A is $0.50, the price of B is $4.00, and Monica's income is $120.00. Assume A is on the x axis. At a bundle, A=1, B=2, Monica's MRS is 2 v. At this bundle, Monica should Monica should optimally buy 120 v units of good A and 15 v units of good B.
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 6QP
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