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Slash spends his income on strings (S) and guitar picks (G). Strings are priced at $2, while a package of guitar picks cost $1. Assume
Slash spends his income on strings (S) and guitar picks (G). Strings are priced at $2, while a package of guitar picks cost $1. Assume that Slash has $30 to spend and his utility function can be represented as U(S,G) = S0.5G0.5 For this utility function, MUS = 0.5S0.5G0.5 and MUG = 0.5S0.5G0.5.
- (a)What is the optimal number of strings and guitar picks for Slash to purchase? How much utility does this combination give him?
- (b)If the price of guitar picks doubles to $2, how much income must Slash make to maintain the same level of utility?
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