5. Donald Fribble is a stamp collector. The only things other than stamps that Fribble consumes are

tomatos. It turns out that Fribble's preferences are represented by the utility function u(s,t) = s + ln t ,

where s is the number of stamps he collects and t is the number of tomatos he consumes. The price of

stamps is ps and the price of tomatos is pt

. Donald's income is m. [4 points]

(a) Write an expression that says that the ratio of Fribble's marginal utility for tomatos to his marginal

utility for stamps is equal to the ratio of the price of tomatos to the price of stamps.

(b) You can use the equation you found in the last part to show that if he buys both goods, Donald's

demand function for tomatos depends only on the price ratio and not on his income.

(c) Use the budget equation and Donald's demand function for tomatos to find an expression for the

number of stamps he will buy.

(d) Donald's wife complains that whenever Donald gets an extra dollar, he always spends it all on stamps.

Is she right? Explain.