Question
Jamilah's preferences over the consumption of bread and fish are represented by the utility function u(x,y) = (xy)^1/2, where x and y denote the quantities
Jamilah's preferences over the consumption of bread and fish are represented by the utility function u(x,y) = (xy)^1/2, where x and y denote the quantities of bread and fish, respectively, measured in hectograms. Jamilah's budget is $100 and the prices per hectogram are px = $5 and py = $2.
(a) Compute Jamilah's marginal rate of substitution of fish for bread.
(b) Compute Jamilah's optimal consumption bundle. What are her expenditure shares? What is Jamilah's utility level associated with her choice of bread and fish?
(c) Let {9, y1}, {5, y2} and {1, y3} be three bundles of bread and fish that make Jamilah indifferent to her own choice. Compute y1, y2 and y3. Compute the total purchase price of the three bundles. Are the bundles feasible?
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