Reshad's preferences over goods 1 and 2 are given by the following utility function:1U(q1, q2)911+ q2Reshad's income is $60 and the prices are given by p1=2 and p2=6.Select all that applies:92U a) Marginal rate of substitution for his preferences is given by MRS12O b) When he consumes zero amount of good 2, his MRS12 is equal to 1c) It is optimal for him to consume 30 units of good 1d) It is optimal for him to consume 10 units of good 2e) If the price of good 1 doubles, he will increase his consumption of good 2.O f) none of the above

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Answered: O b) When he consumes zero amount of…

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O b) When he consumes zero amount of good 2, his MRS12 is equal to 1

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Reshad's preferences over goods 1 and 2 are given by the following utility function:
1
U(q1, q2)
91
1+ q2
Reshad's income is $60 and the prices are given by p1=2 and p2=6.
Select all that applies:
92
U a) Marginal rate of substitution for his preferences is given by MRS12
O b) When he consumes zero amount of good 2, his MRS12 is equal to 1
c) It is optimal for him to consume 30 units of good 1
d) It is optimal for him to consume 10 units of good 2
e) If the price of good 1 doubles, he will increase his consumption of good 2.
O f) none of the above

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