Consider the utility function: U (X, Y) = ln(X) + B ln (Y) where
Question:
a. Calculate MUX, MUY, and MRSXY.
b. Compare the formula for MRSXY to the corresponding formula for Cobb-Douglas utility. How do the indifference curves for these two types of utility functions compare? In what way (if any) do they represent different preferences?
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a Marginal utility of X MU X a X Marginal utility of Y ...View the full answer
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