A consumer has a utility function given by a) Derive an expression for the two marginal...

 

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A consumer has a utility function given by a) Derive an expression for the two marginal utilities: MU₁ (1, ₂) and MU₂ (1,202). Since MRS-MU, use these marginal utilities to derive a simple expression for the MRS (21,22). b) Optimal choice on the part of the consumer implies MRS-Suppose M = 20, P₁ = P2 = 1. Show the optimal choice in this case on a well-labelled graph of the budget set. Include an indifference curve consistent with these preferences. c) Now keep income at 20, and p21, but set pi=2. Show the optimal choice in this case on a well-labelled graph of the budget set. Include an indifference curve consistent with these preferences. d) Now consider any set M.P.P. We have two equations that must hold: pi+p2t2 = M and MRS (₁,2)-2. Use these equations to solve for the consumer's demand function for good 1. A consumer has a utility function given by a) Derive an expression for the two marginal utilities: MU₁ (1, ₂) and MU₂ (1,202). Since MRS-MU, use these marginal utilities to derive a simple expression for the MRS (21,22). b) Optimal choice on the part of the consumer implies MRS-Suppose M = 20, P₁ = P2 = 1. Show the optimal choice in this case on a well-labelled graph of the budget set. Include an indifference curve consistent with these preferences. c) Now keep income at 20, and p21, but set pi=2. Show the optimal choice in this case on a well-labelled graph of the budget set. Include an indifference curve consistent with these preferences. d) Now consider any set M.P.P. We have two equations that must hold: pi+p2t2 = M and MRS (₁,2)-2. Use these equations to solve for the consumer's demand function for good 1.

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a Determine an articulation for the two minor utilities MU1 x1 x2 and MU2x1 x2 Since MRS MU1MU2 MRSx1 x2 utilize these minimal utilities to infer a st... View the full answer