Jerry receives utility from days spent traveling on, Ask an Expert

Economics

Jerry receives utility from days spent traveling on vacation domestically (D) and days spent traveling in a foreign country (F) as given by the utility U(D,F)=DF. The price of a day spent traveling domestically is $160 and in a foreign country $200. Jerry's annual budget for traveling is $8,000.

a) Find the marginal utility of domestic travel and foreign travel.

b) Using the marginal utilities in your answer to (a), find Jerry's marginal rate of substitution

c) Find the slope of the budget constraint line

d) Find Jerry's utility maximizing choice of days traveling domestically and in a foreign country

e) Find also his utility level from consuming that bundle in your answer to (d)

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91372541

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