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(Solved): Louise likes to consume food (F) and electricity (E). Louises utility function is U(F,E) = F0.5B0 ...



Louise likes to consume food (F) and electricity (E). Louise’s utility function is U(F,E) = F0.5B0.5, so her marginal rate of substitution of food for electricity (MRSF,E) is E/F. (a) With food on the vertical axis and electricity on the horizontal axis, show Louise’s budget line if food costs €20 per unit, electricity costs €10 per megawatt and her monthly budget/income for these goods is €400.



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