# Angela derives utility from Coca-Cola (C) and attending rock concerts (R). Her utility function

**cybacatx**

3. Angela derives utility from Coca-Cola (C) and attending rock concerts (R). Her utility

function is U(R,C) = C0.9R

0.1, where C and R are the number of colas and rock concerts

consumed per year, respectively.

A. If the price of colas is $1 and the price of concert tickets is $30, and Angela’s income

is $300, how many colas and concert tickets will she buy to maximize utility? Verify that

MRS = MRT at the optimal solution.

B. Suppose the promoters of the rock concert make the following requirement: Either

buy four rock concert tickets or none at all. Under this constraint, and given the prices

and income above, how many colas and rock concerts will Angela buy to maximize

utility? Verify that MRS ≠ MRT at the optimal solution.

- 10 years ago

**100% Quality Work A+ Tutorial Guaranteed Work for you use as Guide**

Purchase the answer to view it

- 8594623.doc