Linda loves buying shoes and going out to dance.
Her utility function for pairs of shoes, S, and the
number of times she goes dancing per month, T,
is U(S, T) = 2ST, so MU5 = 2T and MUT = 25.
It costs Linda $50 to buy a new pair of shoes or to
spend an evening out dancing. Assume that she has
$500 to spend on clothing and dancing. (Hint: See
What is the equation for her budget line? Draw
it (with T on the vertical axis), and label the
slope and intercepts.
- 50S + 50T = 500 ® S + T
- = 10