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Indifference curves and marginal rate of substitution
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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)=2 S T, so M US=2 T and M UT=2 S . 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 shoes and dancing. a. What is the equation for her budget line? Draw it (with T on the vertical axis), and label the slope and intercepts. b. What is Linda's marginal rate of substitution?
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