Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C) = FC. In addition, the price of food is $3 per unit, the price of clothing is $6 per unit, and Julio's weekly income is $50. What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Explain. Julio's marginal rate of substitution equals OA. 2.00, which is the price of clothing divided by the price of food. OB. 2.00, which is (minus) the slope of the budget line. OC. 2.00, which is Julio's level of satisfaction. O D. 0.50, which is the price of food divided by the price of clothing. OE. 0.50, which is the price of clothing divided by the price of food.
Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C) = FC. In addition, the price of food is $3 per unit, the price of clothing is $6 per unit, and Julio's weekly income is $50. What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Explain. Julio's marginal rate of substitution equals OA. 2.00, which is the price of clothing divided by the price of food. OB. 2.00, which is (minus) the slope of the budget line. OC. 2.00, which is Julio's level of satisfaction. O D. 0.50, which is the price of food divided by the price of clothing. OE. 0.50, which is the price of clothing divided by the price of food.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 2QFR
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