Suppose that Susan has a utility function U(D,F) = 10DF , where D is days of domestic travel, and F is days of foreign travel. Let the price of D be 100, the price of F be 400, and total income for travel be 4000.
a) What is the set of market baskets that exhaust all of Susan's income? Draw Susan's budget line.
b) What is the set of market baskets that give Susan a utility level of 1000? Draw Susan's indifference curve at utility level of 1000
c) What is the marginal rate of substitution of D for F when Susan chooses D and F to maximize her utility?
d) What are the choices of D and F that maximize Susan's utility given her budget constraint?