Question

Joseph has the utility function U(F,H) = 10F2H, where F is the quantity of food he consumes per year and H is the quantity of housing per week. Suppose the price of food is $10 and the price of housing is $5, while Joseph has an income of $150/week.
a. What can you say about the nature two goods that Joe consumes? And why so?
b. Does the indifference curve exhibit diminishing marginal rate of substitution (MRS)? Provide appropriate reasons.
c. Calculate Joseph's MRS as a function of the quantities F and H. Show all the work.

Answer 1

U= 10 FH PE = 10 , Pu=5, I = 150 Joseph as both a F & M are give positive normal utility goods for to him. Indifference curve enhibits diminishing MRS. because as one moves down the standard Conve shaped indifference curve , the consumer is less willing to substitute one for another U= 1 OF? mur= 04 - 20 FH mun= au = 10² ди ZH MRs = 20 FH loEn