Question: An individuals utility function is given by U = 200x1 + 800x2 + 3x1x2 x? x3/2, when the weekly amount of leisure is x1 =

 An individuals utility function is given by U = 200x1 +
800x2 + 3x1x2 x? x3/2, when the weekly amount of leisure is

An individuals utility function is given by U = 200x1 + 800x2 + 3x1x2 x? x3/2, when the weekly amount of leisure is x1 = 136 and earned income is x2 = 720 answer the following: 1. The marginal utility of x1 is C] 2. The marginal utility of x2 is 3. Use the small increments formula to estimate the change in the utility when x1 decreases by 1 and x2 increases by 4. The change = C] 4. Does the law of diminishing marginal utility hold? 5. The MRCS at a given values is C], Enter noninteger numerical values as decimals to at least 3 decimal places. Note: you must use a . and not , for a decimal point

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Mathematics Questions!