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QUESTION
Jane purchases food and clothing and has utility U(F,C) = 2FC with marginal utilities MUC = 2F and MUF = 2C. Let PF = $2 and PC = $10. Jane faces a...
Jane purchases food and clothing and has utility U(F,C) = 2FC with marginal utilities MUC = 2F and MUF = 2C. Let PF = $2 and PC = $10. Jane faces a weekly budget constraint $500. 1. Is the assumption that more is better satisfied for both goods?2. Is MRS diminishing as Jane gets more F and more F? 3. What is Jane’s budget constraint? Find slope.4. What is the optimal basket that maximizes Jane’s utility?
Jane purchases food and clothing and has utility U(F,C) = 2FC with marginal utilities MUC = 2Fand MUF = 2C. Let PF = $2 and PC = $10. Jane faces a weekly budget constraint $500.1. Is the...