Question: Consider a consumer with utility function u(x, y) = x 3 y 2 , where x and y stand for the quantities of goods 1
Consider a consumer with utility function u(x, y) = x 3 y 2 , where x and y stand for the quantities of goods 1 and 2 respectively. 1. Write down the marginal utility for goods 1 and 2. 2. Are these preferences monotone? 3. Does the consumer have a satiation or bliss point? 4. Write down the MRS between goods 1 and 2. 5. Does the MRS depend on the relative consumption of goods 1 and 2? 6. Graph two indifference curves for the consumer, and identify which one yields higher utility.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
