Jane's utility function is U = 4XY, where X= number of sandwiches per week and Y = number of salads per week. a. What are Jane's marginal utility of X and marginal utility of Y? b. What is Jane's marginal rate of substitution of sandwiches for salads (if salads are on the y- axis and sandwiches are on the x-axis)? c. Jane's income is $400, the price of a sandwich is $2, and the price of a salad is $4. How many sandwiches and how many salads does Jane consume to maximize her utility? d. When the price of a sandwich is $1, what is her new optimal bundle? e. Plot a graph and show your optimal bundles in parts (c) and (d) on the same graph.
Jane's utility function is U = 4XY, where X= number of sandwiches per week and Y = number of salads per week. a. What are Jane's marginal utility of X and marginal utility of Y? b. What is Jane's marginal rate of substitution of sandwiches for salads (if salads are on the y- axis and sandwiches are on the x-axis)? c. Jane's income is $400, the price of a sandwich is $2, and the price of a salad is $4. How many sandwiches and how many salads does Jane consume to maximize her utility? d. When the price of a sandwich is $1, what is her new optimal bundle? e. Plot a graph and show your optimal bundles in parts (c) and (d) on the same graph.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Jane's utility function is U = 4XY, where X= number of sandwiches per week and Y = number of
salads per week.
a. What are Jane's marginal utility of X and marginal utility of Y?
b. What is Jane's marginal rate of substitution of sandwiches for salads (if salads are on the y-
axis and sandwiches are on the x-axis)?
c. Jane's income is $400, the price of a sandwich is $2, and the price of a salad is $4. How
many sandwiches and how many salads does Jane consume to maximize her utility?
d. When the price of a sandwich is $1, what is her new optimal bundle?
e. Plot a graph and show your optimal bundles in parts (c) and (d) on the same graph.
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