Find the optimal consumption bundle

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Julie spends all of her $60,000 salary on vacationing and remodeling projects. Her typical vacation costs $2,000 and the remodeling projects cost $4,000 each. Julie's willingness to trade remodeling jobs for one additional vacation is given by MRS = R/2V, where R is the number of remodeling projects she takes on and V is the number of vacations she takes.

a) What two conditions must be met for Julie to be maximizing her utility?

b) Solve the conditions from part a to find the optimal (i.e., utility maximizing) consumption bundle.

Reference no: EM13832480

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