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A buyer's preferences are represented by the following utility function and the corresponding marginal utility functions for each of the two goods in the economy;
A buyer's preferences are represented by the following utility function and the corresponding marginal utility functions for each of the two goods in the economy; iTunes songs and beer.
U = 50s?b?
MUs? = 25sb??
MUb? =bs??
Where MUs? is the marginal utility of songs and MUb? is the marginal utility of beer. We also know that the market price of an iTunes song is $1, the price of a beer is $4, and the consumer's budget is $100.
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