Question: Canonical utility function. Consider the utility function c - o uc ) 1 - 0 ( a ) where c denotes consumption of some arbitrary
Canonical utility function. Consider the utility function co uca where c denotes consumption of some arbitrary good and o Greek lowercase letter "sigma" is known as the "curvature parameter" because its value governs how curved the utility function is In the following, restrict your attention to the region e because "negative consumption" is an illdefined concept The parameter o is treated as a constant. i Plot preferably with MATLAB the utility function for o Does this utility function display diminishing marginal utility? Is marginal utility ever negative for this utility function? ii Plot preferably with MATLAB the utility function for o Does this utility function display diminishing marginal utility? i Consider instead the naturallog utility function uc Inc Does this utility function display diminishing marginal utility? Is marginal utility ever negative for this utility function? iv Determine the value of o if any value exists at all that makes the general utility function presented above collapse to the naturallog utility function in part cHint: Examine the derivaives of the two functions.
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