Question: 7 . MRS and utility maximization Suppose your classmate Becky loves to eat dessert so much so that she allocates her entire weekly budget to
MRS and utility maximization
Suppose your classmate Becky loves to eat dessertso much so that she allocates her entire weekly budget to peach cobbler and pie. The price of one bowl of peach cobbler is $ and the price of a piece of rhubarb pie is $ At her current level of consumption, Becky's marginal rate of substitution MRS of peach cobbler for pie is In other words, Becky is willing to sacrifice three bowls of peach cobbler for one piece of pie per week.
Does Becky's current consumption bundle maximize her utility? That is does it make her as well off as possible? If not, how should she change it to maximize her utility?
Becky could increase her utility by buying less peach cobbler and more pie per week.
Becky's current bundle maximizes her utility, and she should keep it unchanged.
Becky could increase her
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