Suppose utility is given by the following function: u(x, y) = xy 3 Use this utility function

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Suppose utility is given by the following function: u(x, y) = xy³ Use this utility function to answer the following questions:

(d) What is the marginal rate of substitution implied by this utility function? What does this mean in words?

(e) How much of each good would this individual need to have to be willing to trade 1 unit of good x for 1 unit of good y (i.e. for the MRS to be equal to 1)?

(f) Suppose we squared utility, so that u(x, y) = (xy³ ) ² . Would this affect the marginal utilities? Would this affect the MRS?

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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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Posted Date: Feb 19, 2024 01:37 AM

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Suppose utility is given by the following function: u(x, y) = xy 3 Use this utility function

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Microeconomics

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