Consider an individual making choices over two goods, x and y with prices px and py, and who has income I (a) 5 marks If utility is given by u(x y) x2 y2, what is the marginal rate of substitution MRS Are these preferences convex Are they homogeneous Explain for each

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MRS xy dx dy MU y MU x where xytwo different goods dx dy derivative of y with respect to x MUmarginal utility of good x y The marginal rate of substit... View the full answer