15 If the utility function U between food F and clothing C c

15) If the utility function (U) between food (F) and clothing (C) can be represented as U = FC, the marginal rate of substitution of clothing for food equals ? please explain how to het MRS from utility function and formula?

Solution

Marginal rate of substitution of C for F is equal to the marginal utility of C divided by the marginal utility of F at a point on an indifference curve, i.e holding utility constant (dU = 0)

MU_c = F [i.e. d(FC) / dC)

MU_F = C [i.e. d(FC) / dF)

MRS_CF = MU_c / MU_F = F/C

Total utility will remail constant. It means

dU(F,C) = MU_c + MU_F = 0