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(2) (20 points) For each of the following utility functions find the Marginal Rate of Substitution (MRS) (a) u(ra, It) = Tax (b) u(x,y) =23/4y1/4
(2) (20 points) For each of the following utility functions find the Marginal Rate of Substitution (MRS) (a) u(ra, It) = Tax (b) u(x,y) =23/4y1/4 (c) u(ta, It) = - In(ta) + - In(It) (d) u(r,y) = =In(x) + In(y) (e) u(Ta, Tb) = 21 + Tb(3) (60 points) Assume an agent's income is 100 and pa = 2 and pr =5. What is the optimal consumption of apples and bananas for each utility function? 3/4 1/4 (a) u(Ia, It) = Ta b (b) u(ta, It) = In(.) + In(15) (c) u(Ta, It) = 20a + It (d) u(fa, It) = Ta + 316 (e) u(fa, It) = min {2:a, 26} (f) u(ta, rb) = min{fa, 3x }
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