Dennis is only interested in two things, eating food and playing the online multiplayer game Globe of Gratuitous Violence (GoGV) - a close competitor to world of war craft. Dennis's utility is given by the function U(qf,qg) = 0.25ln(qf) + 0.75ln(qg) where qf is the quantity of food and qg is the hours of GoGV play. The price of a meal of food is $10, the hourly fee for GoGV is $2.50, and Dennis's income is $1,000/month.
1. Write down the general expression for Dennis's marginal utility with respect to food and GoGV play.
2. Determine the Marginal Rate of Substitution (MRS) among food and GoGV play? (e.g. the rate at which Dennis willing to exchange a meal for another hour of GoGV play?
3. Suppose the Dennis has a budget of $1,000/month. Illustrate Dennis's monthly budget line, with food on the vertical (y axis) and GoGV on the horizontal axis.