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true or false? The marginal utility of food to Zecher depends only on the amount of food (and not on the amount of housing) and
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The marginal utility of food to Zecher depends only on the amount of food (and not on the amount of housing) and the marginal utility declines as more food is consumed; likewise for housing. Therefore, both food and housing are normal goods. (Hint: Express the optimality condition for Zecher's [UMP],MUF/MUH=PF/PH. Notice thatPF/PHis fixed. If all of an increase in income is spent onF, can the equality be maintained?)
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