5.2 The rational spending rule requires MUF/PF = MUS/PS where MUF and MUS are Juans marginal utilities
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5.2 The rational spending rule requires MUF/PF = MUS/PS where MUF and MUS are Juan’s marginal utilities from food and shelter and PF and PS are the prices of food and shelter, respectively. At Juan’s original combination, MUF/PF = 4 utils per dollar and MUS/PS = 3 utils per dollar. Juan should thus spend more of his income on food and less on shelter. (LO3)
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Related Book For 
Principles Of Microeconomics
ISBN: 9781264250387,9781264250448
8th Edition
Authors: Robert H. Frank , Ben Bernanke , Kate Antonovics , Ori Heffetz
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