Problem 3: Well-Behaved Indifference Curves & Optimization [6 Points]Consider an Individual who buys Films (F) and Books (B) with the following utility function:U(F,B) = 2F¹/3B²/3This individual also has the following incomes (m) and prices (pF and pB):m = $30, PF = $2,PB = $6Given the above, the Marginal Utilities of each Films (MUF) and Books (MUB) are:2 F¹33 B¹31B²/33 F²/3MUB= 25MUF = 2;9. Given the above Marginal Utilities and prices to form the optimality condition for utilitymaximization. According to this optimality condition, what must be the ratio of Films toBooks in an optimal consumption bundle? Show your work.10. Given your answer to Q9, what must be the household's optimal consumption of F & Bgiven their income (m)? Show your work.11. Suppose that the price of Films changed from $2 to $4. What would need to happen tothe MRS according to the optimality condition in Q9 if the household wanted to keepmaximizing its utility?

Problem 3: Well-Behaved Indifference Curves & Optimization [6 Points] Consider an Individual who buys Films (F) and Books (B) with the following utility function: U(F,B) = 2F¹/3B²/3 This individual also has the following incomes (m) and prices (pF and PB): m = $30, PF = $2,PB = $6 Given the above, the Marginal Utilities of each Films (MUF) and Books (MUB) are: 2 F¹3 ²3 B¹3 MUB= 23

Problem 3: Well-Behaved Indifference Curves & Optimization [6 Points] Consider an Individual who buys Films (F) and Books (B) with the following utility function: U(F,B) = 2F¹/3B²/3 This individual also has the following incomes (m) and prices (pF and PB): m = $30, PF = $2,PB = $6 Given the above, the Marginal Utilities of each Films (MUF) and Books (MUB) are: 2 F¹3 ²3 B¹3 MUB= 23

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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