Question

36. If the utility function (U) between food (F) and clothing (C) can be represented as U = VFX C, the marginal utility of food equals O A. 172./F7C. OB. FIC C. 172./C/F. OD. /C/F. 37. If Fred's marginal rate of substitution of salad for pizza equals five, then O A. he will eat five times as much pizza as salad. OB. he would give up five salads to get the next pizza. O c. he will eat five times as much salad as pizza. OD. he would give up five pizzas to get the next salad.

Answer 1

Answer

36)

The correct answer is (C) (1/2)(C/F)^1/2

Formula :

Marginal utility of Good x(MU_x) is given by

$MU_x = \frac{\partial U}{\partial x}$

Utility function is given by :

U = (FC)^1/2

Hence Marginal utility of Food(MU_F) is given by

$MU_F = \frac{\partial U}{\partial F} = (1/2)F^{-1/2}C^{1/2} = (1/2)(C/F)^{1/2}$

Hence, the correct answer is (C) (1/2)(C/F)^1/2

37)

The correct answer is (D) he would give up five pizzas to get the next salad.

Marginal Rate of substitution of X for Y tells us how many Y he is willing to sacrifice in order to have 1 additional unit of X in order to have same level of utility.

Here, Marginal Rate of substitution of Salad for Pizza = 5.

Using above interpretation we can say that he is willing to sacrifice 5 units of Pizza in order to have 1 additional unit of Salad.

Hence, the correct answer is (D) he would give up five pizzas to get the next salad.