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Economics

Question: The utility function that Jane receives by consuming food and clothing is given by U= F*C.

1) In a diagram, draw the indifference curves associated with utility levels of 12 and 24 (measure clothing along the horizontal axis).

2) Suppose that the price of food is $1 per unit and the price of clothing is $3 per unit, and Jane has $12 to spend. Graph the budget line that Jane faces in the diagram you have drawn for part (a).

3) From your diagram, find Jane's utility-maximising choice of food and clothing.

4) What is the MRSC,F at the point of utility maximisation?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93116277

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