Carina buys two goods, food, F, and clothing, C, with the utility function, U = FC + F. She has an income of 20. The price of clothing is 4. a) Derive the equation representing Carina's demand for food. b) Calculate the income and substitution effects on Carina's consumption of food when the price of food rises from 1 to 4.

College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter1: Equations And Graphs
Section1.3: Lines
Problem 92E
Question

Carina buys two goods, food, F, and clothing, C, with the utility function, U = FC + F.  She has an income of 20.  The price of clothing is 4.  

a) Derive the equation representing Carina's demand for food. 

b) Calculate the income and substitution effects on Carina's consumption of food when the price of food rises from 1 to 4.  

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