What is the marginal rate of transformation

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1. Latoya buys only bread and salami, and her utility from these is U(B,S) = 20B0.5S0.5 , so that the marginal utility from bread is MUB = 10B-0.5S0.5 , and the marginal utility from salami is MUs = 10B0.5S-0.5. Shelley has $240 to spend, and the price of bread is $2, while the price of salami is $3. Let Bread be the x-good.

a. Compute the marginal rate of substitution between bread and salami when B=10 and S=10? Enter the number online without the negative sign.

b. What is the marginal rate of transformation?

c. Compute the optimal amount of bread and salami that Shelley will choose to consume.

d. What is the highest utility Shelley can achieve with her budget and the prices in this economy?

Reference no: EM132499901

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