Jane purchases the food and clothing and has the utility U(F,C) = 2FC with marginal utilities MUF = 2C and MUC = 2F. Let the PF = $2 and the PC = $10. Jane faces a weekly budget constraint $500.
a. Is the assumption that more is better satisfied for both goods?
b. Is MRS diminishing as Jane gets more F and more F?
c. Calculate Jane's budget constraint? Find slope.
d. Calculate the optimal basket that maximizes Jane's utility?