Juanita consumes only food (F) and clothing (C). Her utility curve is given by: U(F,C) = 2FC
a. Draw her indifference curve for a utility level of 24. Draw one for a utility level of 48. Are the indifference curves convex? Use graph paper - make sure everything is to scale. Put food on the vertical axis and clothing on the horizontal axis.
b. Suppose that food costs $1 per unit and clothing costs $3 per unit. If Juanita has $12 to spend on food and clothing, draw her budget constraint (use the same graph as in part a).
c. What is Juanita's utility maximizing quantities of food and clothing (solve graphically)?
d. What is the MRS when utility is maximized? Explain.
e. Suppose that Juanita purchased 3 units of food and 3 units of clothing with her $12 budget. Would her MRS be greater than or less than your answer in part d? Explain.