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Please help me with this exercise
Fra : Peter Ogstrup


Dato : 29-09-03 09:30

4. (6 points total) The fourth floor of the International Affairs
building at Columbia University has a great selection of vending
machines that sell snack foods and drinks. Suppose Harry—a first year
MIA student--- has a snack food utility function U = 3SD, where S is
the number of packages of snack food and D is the number of drinks per
week so that his marginal utility of S (MUS) is 3D and his marginal
utility of D (MUD)is 3S. Snack foods are priced at 50 cents per
package and drinks are priced at $1 per drink.



(1 point) Write an expression for Harry's marginal rate of
substitution (MRS) between snack foods and drinks.
(2 points) Use the expression generated in (a) to determine Harry's
optimal mix of snack foods and drinks
(3 points) If Harry has $6 per week to spend on snack foods and
drinks, how many of each should he purchase per week?

 
 
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