Pls help with thsi question I am stuck Given the image attatched: 1.Given the above Marginal Utilities and prices to form the optimality condition for utility maximization. According to this optimality condition, what must be the ratio of Films to Books in an optimal consumption bundle? 2. Given your answer to Q9, what must be the household’s optimal consumption of F & B given their income (m)? 3. Suppose that the price of Films changed from $2 to $4. What would need to happen to the MRS according to the optimality condition in Q9 if the household wanted to keep maximizing its utility?
Pls help with thsi question I am stuck Given the image attatched: 1.Given the above Marginal Utilities and prices to form the optimality condition for utility maximization. According to this optimality condition, what must be the ratio of Films to Books in an optimal consumption bundle? 2. Given your answer to Q9, what must be the household’s optimal consumption of F & B given their income (m)? 3. Suppose that the price of Films changed from $2 to $4. What would need to happen to the MRS according to the optimality condition in Q9 if the household wanted to keep maximizing its utility?
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 1WNG
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Pls help with thsi question I am stuck
Given the image attatched:
1.Given the above
maximization. According to this optimality condition, what must be the ratio of Films to
Books in an optimal consumption bundle?
2. Given your answer to Q9, what must be the household’s optimal consumption of F & B
given their income (m)?
3. Suppose that the price of Films changed from $2 to $4. What would need to happen to
the MRS according to the optimality condition in Q9 if the household wanted to keep
maximizing its utility?
Transcribed Image Text: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
PF
Given the above, the Marginal Utilities of each Films (MUF) and Books (MUB) are:
2 F¹3
: $2,PB = $6
MUB = 2
-
3 B ¹/3
1B²/3
MUF = 2 2
3 F²/3
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