You are the economic advisor of the ruler of Pongo. Suppose the people in the country of Pongo loves eating worms and pine cones. The price of a worm is $2 and the price of a pine cone is $6. As this land is ruled by the super awesome and awesomely benevolent Dr. Lee, he ensures all people have $24,000 each day to spend on worms and pine cones. All the people have the same marginal rate of substitution for worms and pine cones which is presented below: MRS = [MU(Worms)/MU(Pine Cones)] = 4(Qw/Qp) Please help the super awesome leader make his people as happy as possible subject to the information provided above. Specifically, how many worms and pine cones should each person eat per day? [Hint: Maximize happiness subject to budget constraint.]
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You are the economic advisor of the ruler of Pongo. Suppose the people in the country of Pongo loves eating worms and pine cones. The price of a worm is $2 and the price of a pine cone is $6. As this land is ruled by the super awesome and awesomely benevolent Dr. Lee, he ensures all people have $24,000 each day to spend on worms and pine cones. All the people have the same marginal rate of substitution for worms and pine cones which is presented below:
MRS = [MU(Worms)/MU(Pine Cones)] = 4(Qw/Qp)
Please help the super awesome leader make his people as happy as possible subject to the information provided above. Specifically, how many worms and pine cones should each person eat per day? [Hint: Maximize happiness subject to budget constraint.]
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