Problem: I want some assistance in answering the questions about this case study:
U = A(D^1/3 * C^2/3)
Doughnuts are $5
Cookies are $20
Income is $200
Q1. Assume that A= 1 for Janet's utility function (above). Calculate the marginal utility of doughnuts; the marginal utility of cookies;
Q2. Calculate the marginal rate of substitution of cookies for doughnuts (MRSC, D) for Paul's utility function.
Q3. Now, assume doughnuts and cookies can be sold in whole or in half packs. Assume also that the price and income levels of the two commodities are as provided above. Prove that the utility maximizing bundle for Janet will be 14 packs of doughnuts and 6.5 packs of cookies.