The consumer is choosing between two goods- good1 and good2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods.
1. Let the utility function of the consumer be U (X1, X2) = X1(1/2)X2(1/2).
a) Calculate the Marginal rate of substitution.
b) Calculate the optimal consumption bundles.
2.Let the utility function of the consumer be U (X1, X2) = X1(1/4)X2(3/4).
a) Calculate the Marginal rate of substitution.
b) Calculate the optimal consumption bundles.
3. Let the utility function of the consumer be U (X1, X2) = X1+X2.
a) Calculate the Marginal rate of substitution.
b) Calculate the optimal consumption bundles.
4. Let the utility function of the consumer be U (X1, X2) = 2X1+3X2.
a) Calculate the Marginal rate of substitution.
b) Calculate the optimal consumption bundles.
5. Let the utility function of the consumer be U (X1, X2) = Min (X1, X2)
a) Calculate the Marginal rate of substitution.
b) Calculate the optimal consumption bundles.
6. Let the utility function of the consumer be U (X1, X2) = 2X1 + X22.
a) Calculate the Marginal rate of substitution.
b) Calculate the optimal consumption bundles.
7.Let the utility function of the consumer be U (X1, X2) = X1*X2
a) Calculate the Marginal rate of substitution.
b) Calculate the optimal consumption bundles.