A consumer of two goods (X and Y) has the following utility function: U(x,y)=xy-ay^2, whre x>=0 and
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A consumer of two goods (X and Y) has the following utility function: U(x,y)=xy-ay^2, whre x>=0 and y>=0 and a>0 is a parameter.
(a) Are there bundles for which one of the goods is actually a "bad" (in the sense that consuming more of it reduces utility)?
(b) Find the MRS.
Expert Answer:
a To determine if there are bundles for which one of the goods is a bad we need to examine the margi... View the full answer
Related Book For 
Managerial Economics and Business Strategy
ISBN: 978-0071267441
7th Edition
Authors: Michael R. baye
Posted Date:
