Question: QUESTION 2 (30 points) Jack's utility function is u(x, y) = xzy. A. What is the marginal rate of substitution between x and y (MRSxy)?

QUESTION 2 (30 points) Jack's utility function is u(x, y) = xzy. A. What is the marginal rate of substitution between x and y (MRSxy)? B. What is the tangency condition to obtain his optimal consumption bundle? C. Derive the demand functions for x and y using the Lagrange Method. (Hint: The steps are: 1) set up his utility maximization problem (UMP), 2) write the Lagrangian function, 3) solve for the first-order conditions (FOC's), 4) find the tangency condition from the FOC's, and 5) use the budget constraint to solve for x and y. D. If Px = $2, py = $4 and his income is I = $600, what is his optimal consumption bundle? E. What is the share of his budget spent on each good for the optimal consumption bundle found in part D

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