A shady raccoon strands you on a deserted island with nothing but tree branches (B) and cherries (C). Suppose your utility over branches and cherries is given by U(B,C) = B1/4C3/4 a.) Calculate your marginal rate of substitution as a function of B and C.
A shady raccoon strands you on a deserted island with nothing but tree branches (B) and cherries (C). Suppose your utility over branches and cherries is given by U(B,C) = B1/4C3/4 a.) Calculate your marginal rate of substitution as a function of B and C.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A shady raccoon strands you on a deserted island with nothing but tree branches (B) and
cherries (C). Suppose your utility over branches and cherries is given by
U(B,C) = B1/4C3/4
a.) Calculate your marginal rate of substitution as a function of B and C.
Expert Solution
Step 1
In the consumer theory, a consumer maximizes his total utility or satisfaction by consuming at a point where the budget constraint of the individual becomes tangent to the indifference curve of the consumer.
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