Please show all working so I can understand the process. Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these are the only two items that provide her utility. Furthermore, Mrs. griffiths insists that for every dress she must also buy a handbag. i. What is the algebraic equation for mrs. Griffiths budget constraint if dresses cost $25 each and handbags cost $14 each? how many of each good will she buy and represent this on a budget line with handbags on the horizontal axis. ii. Draw an indifference curve showing the optimum choice. label the optimum as point A. What would be the marginal rate of substitution at the point that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution.
Please show all working so I can understand the process.
Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these are the only two items that provide her utility. Furthermore, Mrs. griffiths insists that for every dress she must also buy a handbag.
i. What is the algebraic equation for mrs. Griffiths budget constraint if dresses cost $25 each and handbags cost $14 each? how many of each good will she buy and represent this on a budget line with handbags on the horizontal axis.
ii. Draw an indifference curve showing the optimum choice. label the optimum as point A. What would be the marginal rate of substitution at the point that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution.
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