Answer to Question #61313 in Microeconomics for Drees
A. Please state the consumers budget constraint.
B. Please find the consumers marginal utility of housing (MU#$) and his marginal utility of
C. Find the optimal consumption bundle of clothing and housing. Please show all the steps of your calculation (hint: use the condition ’()$ = ’()&).
D. Please find the optimal consumption bundle if the consumer total budget is 50
E. Use your answers from above to sketch the Engel curve for housing and clothing.
F. Is housing a normal or an inferior good for the representative consumer (base your answer on the Engel curve).
B. The consumers marginal utility of housing and his marginal utility of clothing should be found as a derivative of the utility function, which is not given.
C. The optimal consumption bundle of clothing and housing should be found in the point, where MUh/Ph = MUc/Ph, MUh/5 = MUc/1 at the budget of M = 10.
D. The optimal consumption bundle if the consumer total budget is 50 will be found like in the part C.
The parts E and F can't be completed without the utility function.
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