The question is about maximizing utility of pizza and beer. Budget contraints and stuff.
Question goes:
Suppose that the price of pizza equals 6 dollars and the price of pizza is 1.5 dollars. Her salary is 18000 dollars, maximize the utility where U = zb .
so you get 6z + 1.5b = 18000 and the marginal rate of substitution is 4b = 1z . Replacing that you get
Question goes:
Suppose that the price of pizza equals 6 dollars and the price of pizza is 1.5 dollars. Her salary is 18000 dollars, maximize the utility where U = zb .
so you get 6z + 1.5b = 18000 and the marginal rate of substitution is 4b = 1z . Replacing that you get
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