Paris has a utility function over berries (denoted by B) and chocolate (denoted by C) as follows: U(B, C) = 2ln(B) + 4ln(C) The price of berries and chocolate is PB and pc, respectively. Paris's income is m. 1. What preferences does this utility function represent? 2. Find the MRSBC as a function of B and C assuming B is on the x-axis. 3. Find the optimal bundle B and C as a function of income and prices using the tangency condition.

Paris has a utility function over berries (denoted by B) and chocolate (denoted by C) as follows: U(B, C) = 2ln(B) + 4ln(C) The price of berries and chocolate is PB and pc, respectively. Paris's income is m. 1. What preferences does this utility function represent? 2. Find the MRSBC as a function of B and C assuming B is on the x-axis. 3. Find the optimal bundle B and C as a function of income and prices using the tangency condition.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.13P

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