2. Janice consumes two goods, X and Y. Janice has a utility function given by the...

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2. Janice consumes two goods, X and Y. Janice has a utility function given by the expression: U = 4X0.5y0.5 The current prices of X and Y are $25 and $50, respectively. Janice currently has an income of $750 per time period (Put X on the horizontal axis and Y on the vertical axis). a) Is the assumption that "more is better" satisfied for both goods? b) Calculate MRSxy. Determine if it is diminishing for this utility function. c) Express the budget equation mathematically. d) Draw a graph to illustrate the shape of a typical indifference curve. Label the curve U. Does the indifference curve intersect either axis? On the same graph, draw a second indifference curve U2, with U>U. 2. Janice consumes two goods, X and Y. Janice has a utility function given by the expression: U = 4X0.5y0.5 The current prices of X and Y are $25 and $50, respectively. Janice currently has an income of $750 per time period (Put X on the horizontal axis and Y on the vertical axis). a) Is the assumption that "more is better" satisfied for both goods? b) Calculate MRSxy. Determine if it is diminishing for this utility function. c) Express the budget equation mathematically. d) Draw a graph to illustrate the shape of a typical indifference curve. Label the curve U. Does the indifference curve intersect either axis? On the same graph, draw a second indifference curve U2, with U>U.

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a To determine if the assumption that more is better is satisfied for both goods we need to check if the utility function exhibits positive marginal u... View the full answer