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RUUNTIVA ?????? > 1 = John loves buying beer and wine. His utility function for gallons of beer per year, B, and gallons of wine
RUUNTIVA ?????? > 1 = John loves buying beer and wine. His utility function for gallons of beer per year, B, and gallons of wine per year, W, is U(B, W) 10B?W. It costs John N$20.00 to buy a gallon of beer and it costs John N$45.00 to buy a gallon of wine. Assume that he has N$1000.00 to spend on beer and wine. a) What is the equation for his budget line? Draw budget line (with beer on the horizontal axis). [5 marks) b) Calculate marginal utility of beer and marginal utility of wine [4 marks] 2
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