Eva receives utility from consuming burgers (X, the good on the horizontal axis) and orange juice (Y) as given by utility function u(X,Y) = XY. The price of burgers is $4 and the price of juice is $8. Eva’s income is $100. When Eva’s utility is maximised, her marginal rate of substitution MRSXY equal 0.5.
Eva receives utility from consuming burgers (X, the good on the horizontal axis) and orange juice (Y) as given by utility function u(X,Y) = XY. The price of burgers is $4 and the price of juice is $8. Eva’s income is $100. When Eva’s utility is maximised, her marginal rate of substitution MRSXY equal 0.5.
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter7: Analytic Trigonometry
Section7.6: The Inverse Trigonometric Functions
Problem 93E
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Eva receives utility from consuming burgers (X, the good on the horizontal axis) and orange juice (Y) as given by utility function u(X,Y) = XY. The price of burgers is $4 and the price of juice is $8. Eva’s income is $100.
When Eva’s utility is maximised, her marginal rate of substitution MRSXY equal 0.5.
Suppose instead that Eva is consuming a bundle on the budget line such that her marginal rate of substitution MRSXY equals 1. Draw the diagram and state whether she consumes (just the right amount / too many/ not enough) of burgers and (just the right amount / too many/ not enough) of glasses of juices.
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