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Intermediate Micro Economics question utility function?
Linda loves buying shoes and going dancing. Her utility function for pairs of shoes, s and the number of times she goes dancing per month, T, is U(S,T)=2ST, so MUs=MUt=2S. It cost linda $50 to buy a new pair of shoes or to spend an evening out dancing . Assume that she has $500 to spend on clothing and dancing.
a. WHat is the equation for her budget line? Draw it ( with T on the vertical axis), and label the slope and intercepts.
b. What is lindas marginal rate of substitution? Expalin.
c. Solve mathmatically for her optimal bundle. Show how to determine this bundle in a diagram using indifferenc curves and a budget line.
Please only explain how the vurves will look. Thank you for your time first correct answer will be given my vote. Thank you again.
Linda loves buying shoes and going dancing. Her utility function for pairs of shoes, s and the number of times she goes dancing per month, T, is U(S,T)=2ST, so MUs=MUt=2S. It cost linda $50 to buy a new pair of shoes or to spend an evening out dancing . Assume that she has $500 to spend on clothing and dancing.
a. WHat is the equation for her budget line? Draw it ( with T on the vertical axis), and label the slope and intercepts.
b. What is lindas marginal rate of substitution? Expalin.
c. Solve mathmatically for her optimal bundle. Show how to determine this bundle in a diagram using indifferenc curves and a budget line.
Please only explain how the vurves will look. Thank you for your time first correct answer will be given my vote. Thank you again.