A consumer has a budget of $200 to spend on bowling (b) and tutoring sessions (t)

| November 24, 2016

A consumer has a budget of $200 to spend on bowling (b) and tutoring sessions (t). Assume that each game of bowling costs $16 and each tutoring session costs $20.

The consumer derives utility from tutoring sessions and bowling according to the utility function U(b,t)

. The consumers marginal utility from each game of bowling is

MUb=t

and the marginal utility of each tutoring session is

MUt=b+1

. What is the consumers marginal rate of substitution?

and then the optimal consumption bundle.

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