Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C) = FC. In addition, the price of food is $3
per unit, the price of clothing is $6 per unit, and Julio's weekly income is $50.
What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Explain.
Julio's marginal rate of substitution equals
• A. 2.00, which is the price of clothing divided by the price of food.
• B. 2.00, which is (minus) the slope of the budget line.
O C. 2.00, which is Julio's level of satisfaction.
• D. 0.50, which is the price of food divided by the price of clothing.
O E. 0.50, which is the price of clothing divided by the price of food.