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Gabriella has a utility function over her food consumption F and her housing consumption H. Gabriella has a utility function over her food consumption F
Gabriella has a utility function over her food consumption F and her housing consumption H.
Gabriella has a utility function over her food consumption F and her housing consumption [-1. V H Her utility is given by U = FR/H. Her marginal utility for food is \\/_ F V} VI? and her marginal utility of housing is . Assume that the price of both goods is 1. a. [4 points] What is Gabriella's total utility if her budget is 13? b. [4 points] Suppose Gabriella is given a choice to play a lottery where, with a 50% probability she could lose $8 (leaving her with $10) and with a 50% probability she could gain $12 (leaving her with $30). Would Gabriella take this gamble? Demonstrate yourStep by Step Solution
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