## Order the answer to: Answer all parts of Problem…

Question | Answer all parts of Problem 3.15 for the utility function U = ?x + 2?y. The marginal utilities for x and y are, respectively, MUx = 1/(2?x ) and MUy = 1/?y . In problem 15 a) Is the assumption that more is better satisfied for both goods? b) Does the marginal utility of x diminish, remain constant, or increase as the consumer buys more x? Explain. c) What is MRSx, y? d) Is MRSx, y diminishing, constant, or increasing as the consumer substitutes x for y along an indifference curve? e) On a graph with x on the horizontal axis and y on the vertical axis, draw a typical indifference curve (it need not be exactly to scale, but it needs to reflect accurately whether there is a diminishing MRSx, y). Also indicate on your graph whether the indifference curve will intersect either or both axes. Label the curve U1. f) On the same graph draw a second indifference curve U2, with U2 > U1. |
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Subject | business-economics |

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