Answer to Question #90232 in Microeconomics for abbas

Question

Consider a drink that is made with ginger and vanilla.
Let the price of ginger be $1 per ounce and the price of vanilla be $0.40 per ounce. Let G be ounces of ginger and V be ounces of vanilla.
Do everything in this problem with G on the horizontal axis and V on the vertical axis.
a. Suppose you maximize utility function
u(G,TO = G°-9V01
subject to a budget constraint based on the above prices and some income m which is unknown. Use the MRS to show what ratio of ginger to vanilla you use to make the drink.

Answer 1

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