3. Let Robinson Crusoe's Production Possibility curve be given by the equation: f²/2 + g = 150 where f is the amount of fish and g is the amount of grain he can obtain. (think of g as plotted on the vertical axis and f as plotted on the horizontal axis). Robinson's marginal rate of substitution in consumption is MRSc = 9/f. (a) Find Robinson's production-consumption optimum R*. (b) If Robinson is discovered by a world market in which P = 5. and P. = 1.
3. Let Robinson Crusoe's Production Possibility curve be given by the equation: f²/2 + g = 150 where f is the amount of fish and g is the amount of grain he can obtain. (think of g as plotted on the vertical axis and f as plotted on the horizontal axis). Robinson's marginal rate of substitution in consumption is MRSc = 9/f. (a) Find Robinson's production-consumption optimum R*. (b) If Robinson is discovered by a world market in which P = 5. and P. = 1.
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.4P
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