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Assume That Diminishing Marginal Utility Applies to Both Ballet Slippers

question 133

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Assume that diminishing marginal utility applies to both ballet slippers and tutus and that Natasha is spending all of her income.If Natasha purchases a combination of ballet slippers and tutus such that MUSlippers/ /PSlippers = 20 and MUTutus/ /PTutus = 5,to maximize utility,Natasha should buy _____ slippers and _____ tutus.


Definitions:

Call Option

A financial contract that gives the holder the right but not the obligation to buy a specific amount of an asset at a specified price within a specific time period.

Spot Exchange Rates

The current exchange rate at which one currency can be exchanged for another for immediate delivery.

Foreign Currency

Currency used in a country other than one’s own, relevant in transactions, accounting, and financial reporting for businesses operating internationally.

Appreciates

Refers to the increase in value of an asset over time.

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