Question
Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual's utility is U(p,k) = k 0.5p 0.5 and income is $100,
Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual's utility is U(p,k) = k 0.5p 0.5 and income is $100, what is the marginal rate of substitution (MRS) between picnics and kayak trips? MRS = -1. MRS = - MRS = 1. There is no substitution because picnics and kayak trips are perfect complements.
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Microeconomics
Authors: Douglas Bernheim, Michael Whinston
2nd edition
73375853, 978-0073375854
