Question
Suppose that Bridget and Erin spend their incomes on two goods, food(F) and clothing (C). Bridgett's preferences are represented by the utility function U (F,C)
Suppose that Bridget and Erin spend their incomes on two goods, food(F) and clothing (C). Bridgett's preferences are represented by the utility function U (F,C) = 10FC, while Erin's preferences are represented by the utility function U(F,C) = 0.20F2C2. (That's F squared and C squared.)
a. Assume that Bridget has $1,200 and the price of food is $20, and the price of clothing is $50. Calculate the quantity of food and clothing that will maximize Bridget's satisfaction.
b. Suppose that Erin has $2,000, the price of food is $45 and the price of clothing is $80. Calculate the quantity of food and clothing that will maximize Erin's satisfaction.
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