Question : Timmy receives a weekly allowance of $12. Every Friday when : 6596
Timmy receives a weekly allowance of $12. Every Friday when he receives his allowance, Timmy runs to the corner store to spend all of his money on Coca-Cola and Sour Patch Kids. Let C = 12 Oz. of Coca-Cola and S = Pounds of Sour Patch Kids and Timmy’s utility is: U(C, S) = 3C^(1/3) 3S^(2/3) . Timmy’s marginal utilities are: MU(C) = C^(2/3 ) S^(2/3) and MU(S) = 2C^(1/3) S^(1/3) .
(a)What are the associated marginal utilities and MRS?
(b)If the price of Coke is $1 and the price of Sour Patch Kids is $2, what will Timmy buy?
(c)The next week, Coke was on sale for $0.50. What will Timmy buy now?