Suppose a consumer's preferences can be described by the utility function U(X, Y) = X + XY.
Question:
a. Do the consumer's preferences satisfy the More-Is-Better Principle?
b. Do the consumer's preferences satisfy the declining MRS property?
c. Does the utility function U(X, Y) = - 1/X + XY represent the same preferences, or different preferences? Explain your answer.
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a Yes b Yes c Same preferences Explanation Utility increases if X andor ...View the full answer
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