Sarah has a monthly income of 200 dollars that she spends buying food that costs $5, clothes that cost $60, and books that cost $20. Sarah;s utility function is given by:
U(F,C,B) = 2ln(f) + 4ln(c) + ln(B)
A) compute the marginal rate of substitution of food for clothing and the MRS of clothing for food.
B) What is the relationship between the two values?
C) Is F=20, C=1, and B=2 and optimal allocation? Explain( Hint: Use the relationshipp between MRS and prices at the optimum)