Jewel's utility is a function of golf (G) and music lessons (M), where MU_G = 1/G and MU_M = 1/M. What is the equation for the marginal rate of substitution of music lessons for golf (MRS_GM)? A) GM B) M/G C) G/M D) M - G

Question

Quizplus · Accepted Answer

The formula for the marginal rate of substitution (MRS) is the ratio of the marginal utility of one good to the marginal utility of the other good. In this case, we want to find the marginal rate of substitution of music lessons (M) for golf (G), so we need to take the ratio of the marginal utility of music lessons to the marginal utility of golf. Using the given utility function, we can calculate the marginal utility of golf as -1/G^2 and the marginal utility of music lessons as -1/M^2. Therefore, the MRS of music lessons for golf is (-1/M^2) / (-1/G^2) = G/M. So, the answer is B.

Jewel's Utility Is a Function of Golf (G) and Music