Question: Hello, I need help deciphering how to solve this, thank you in advance! Question : Suppose that two neighbors with identical preferences derive utility from
Hello, I need help deciphering how to solve this, thank you in advance!
Question: Suppose that two neighbors with identical preferences derive utility from the number of flower gardens in their shared community lot, x, and on the number of tomatoes that they eat from their own vegetable gardens, y. The specific form of the utility function is given by:
Ui(x,yi) = 1/4 lnx + 3/4 lny
The price of one flower garden is $1 and the price of a vegetable garden is $2. Each neighbor has a budget of $12.
a) If each neighbor lived in a community that did not have a shared community lot (i.e had to individually purchase and own both flower and vegetable gardens), what portion of their income would they spend on flower and vegetable gardens, respectively?
b) What utility would they each receive from the allocation in a) above?
c) What is the marginal rate of substitution (MRS) for this utility function?
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