Hans receives utility from consuming F and C as given by the utility function U(F, C) = FC. In addition, the price of F is $2 per unit, the price of C is $10 per unit, and Hans' weekly income is $50.
a. What is Hans' marginal rate of substitution of C for F when utility is maximized? (To be clear, we mean the value of F in terms of C). Explain.
b. Suppose instead that Hans is consuming a bundle with more F and less C than his utility maximizing bundle. Would his marginal rate of substitution be greater than or less than your answer in part a? Explain