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What is scott marginal rate of substitution of regulars

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Scott is deciding which type of toilet paper to buy. There are two varieties of toilet paper- a regular size (R) and a jumbo size (J) that has four times as many sheets per roll. Assume that Scott's preferences for the two varieties can be expressed by the utility function. Utility function is U=(1/4)R+J.(4 points each)

a. Graph Scott's indifference curves for U = 1 and U = 2 with R on the x-axis.

b. What is Scott's marginal rate of substitution of regulars for jumbos, ? How does this relate to the indifference curves you graphed in (a)?

c. Suppose the price of a regular roll is $0.05 and the price of a jumbo roll is $0.25. Will Scott buy regular rolls, jumbo rolls, or some of each? (Hint: you don't need to know Scott's income to answer this!)

Reference no: EM132471727

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