Suppose a Consumer's Utility Function Is U(F₀,F₁)= F₀⁰

question 18

Multiple Choice

Suppose a consumer's utility function is U(F₀,F₁) = F₀^0.6F₁^0.4,where F₀ represents food consumed this year and F₁ represents food consumed next year.For that utility function,the marginal utility of food consumed this year is 0.6 × (F₁/F₀) ^0.4 and the marginal utility of food consumed next year is 0.4 × (F₀/F₁) ^0.6.Which of the following expressions gives the consumer's marginal rate of substitution for food this year with food next year (MRS₀₁) ?

• A) MRS₀₁ = F₁/F₀
• B) MRS₀₁ = (2/3) × (F₀/F₁)
• C) MRS₀₁ = (2/3) × (F₁/F₀)
• D) MRS₀₁ = (3/2) × (F₁/F₀)

---

Definitions:

Parallelism

Parallelism in writing is the use of similar structures in related words, clauses, or phrases to create a balance and rhythm in the composition.

Natural Gas

A fossil fuel consisting mainly of methane, used as an energy source for heating, cooking, and electricity generation, as well as a fuel for vehicles.

High Tax Rate

The proportion of income or revenue taken by the government through taxes is considered to be above average or burdensome.

Decimal System

A numerical system based on 10, particularly used in mathematics and denoting numbers using a point to separate the integer part from the fractional part.