Consider the utility function U(x, y) = yx with the marginal utilities MUx = y/(2x) and MUy
Question:
a) Does the consumer believe that more is better for each good?
b) Do the consumer's preferences exhibit a diminishing marginal utility of x? Is the marginal utility of y diminishing?
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a Since U increases whenever x or y increases more of each good is better This is ...View the full answer
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