QUESTION 1

If the consumer's preference for two goods, x and y, is shown by the equation: U = F (G, K) = Ax ² + By ², where A and B are positive constanta.

a. Find the marginal utility for goods x and y

b. Show that the marginal rate of substitution of good y with respect to x (MRS _{x, y}) is increasing (increasing MRS).

QUESTION 2

Donah allocates IDR 10 million annually to buy Handphone (p) and clothing (h) goods. The level of utility obtained from the consumption of these two types of goods is U (h, p) = h.p + 10h.

If the price of the cellphone is IDR 2 million per unit and the price of the clothes is IDR 1 million per set:

a. Determine the marginal utility of the two goods that Donah consumes

b. Determine the budget equation for the above case

c. Calculate the optimal combination of Handphone and Clothing consumption

d. Calculate Donah's optimal level of utility