Homer is a street person whose preferences over the two goods he consumes, food (good 1)fortified wine (good 2) are represented by the utility function U(x1,x2)=X1x (MU:=x2°,MU;=8x,x;"). Homer receives a pension of $100.00 per week. He can buy food at the 1dispensary at a price of $4 a bucket. The local convenience store sells fortified wine at 5gallon jug.a. What is Homer's MRS?

MRS or Marginal rate of Substitution is a rate at which one good is sacrificed to gain an additional…

Answered: Homer is a street person whose…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For a consumer with a utility function u=3x^2y^2 when px=3 and py=4, find the consumption levels that maximize his utility under the $120 budget constraint. What is the maximum benefit?
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John has $300 as income and he uses his income only for apples and bananas. If he uses his income only for apples, he can buy 10 pounds. If he uses his income only for bananas, he can buy 15 pounds. Which one is the correct formula for his budget constraint when X=pounds of apples, Y=pounds of bananas and the prices are per pound? a) More information is needed to answer the question. b) 15X + 10Y = 300 c) 10X + 15Y = 300 d) 20X + 30Y = 300 e) 30X + 20Y = 300

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