Perfect Substitutes Examples
A consumer has the option for two different bundles of food and shelter:
F = 1; S = 1
F = 2; S = 2
For each of these options, find the formula for the indifference curve and the marginal rate of substitution with the following utility function:
$U=F+S$
How do your answers change if you instead have the following utility function:
$U=50F+50S$
Try to solve this yourself, then watch the videos for a walkthrough of how to do it.
Cobb Douglas Example
Find the indifference curve for utility $U=\bar{U}$ and the the marginal rate of substitution for the following utility function:
$U=FS$
Try to solve this yourself, then watch the videos for a walkthrough of how to do it.
Did you feel like any of the videos above were confusing, or could use more detail? If you're a student at Iowa State University, send me a quick note at mclancy@iastate.edu, referencing the video number and your issue, if applicable.