Homework Clinic
Social Science Clinic => Economics => Microeconomics => Topic started by: crobinson2013 on Jul 1, 2018
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Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual's utility is U(p,k) = k0.5p0.5 and income is 100, what is the marginal rate of substitution (MRS) between picnics and kayak trips?
A) MRS = 1.
B) MRS = -1.
C) MRS = -1/2
D) There is no substitution because picnics and kayak trips are perfect complements.
Question 2
People view alcohol and marijuana as perfect substitutes. This means that
A) individuals will consume either alcohol or marijuana, but not both, regardless of price.
B) as the price of alcohol decreases, marijuana use decreases.
C) the marginal utility for alcohol and marijuana is constant.
D) Both B and C.
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Answer to Question 1
B
Answer to Question 2
D
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