Unformatted text preview: therefore we should have – MRS P S / P T T / S 50/50 1 T * S * . The optimal must also be affordable, thus S * T * 10. Substitution gives us S * T * 5. Problem 41 is not graded. 41. U ( B , Z ) B AB Z Z MU Z 1 AB Z – 1 MRS – MU B / MU Z – [(1 AB – 1 Z )/(1 AB Z – 1 )]...
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 Fall '09
 Elmes
 Microeconomics, Substitute good, threshold level

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