Question: Utility function = (, ) has positive marginal utilities (MUX > 0, MUY > 0) Bundle 1 (!, !) and Bundle 2 (, ) o
Utility function = (, ) has positive marginal utilities (MUX > 0, MUY > 0) Bundle 1 (!, !) and Bundle 2 (", ") o are on the same indifference curve # = (!, !) = (", ") o " > ! Bundle 3 is an equal combination of Bundle 1 and Bundle 2 o Bundle 3 = 50% of Bundle 1 + 50% of Bundle 2 o utility of Bundle 3 is $ = ($, $) $ = # a. Draw the = # indifference curve, reflecting the given information. Show the locations of bundles 1, 2, and 3. Explain your reasoning. b. Does this utility function display diminishing marginal utility? Explain
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