Amy consumes x and y and her preferences can be represented by the followingutility function U(x,y) = 4x + y.1. Are Amy's preferences transitive?2. Does the marginal utility of x diminish, remain constant, or increase as the consumer buysmore x? Explain.6-3. Can you use (2) to answer whether Amy's preferences are strictly monotonic?4. What is MRS.y ? Is MRSx.y diminishing, constant, or increasing as the consumer substitutesx for y along an indifference curve?5. On a graph with x on the horizontal axis and y on the vertical axis, draw a typical indifferencecurve. Also indicate on your graph whether the indifference curve will intersect either or bothaxes. Label the curve U1.6. Are Amy's preferences convex? Are they strictly convex? Explain

Consumers' feelings of pleasure or contentment resulting from using a product or service are known…

Amy consumes x and y and her preferences can be represented by the following utility function U (x, y) = 4x + y. 1. Are Amy's preferences transitive? 2. Does the marginal utility of x diminish, remain constant, or increase as the consumer buys more x? Explain. 3. Can you use (2) to answer whether Amy's preferences are strictly monotonic? 4. What is MRSª.y? Is MRS.y diminishing, constant, or increasing as the consumer substitutes x for y along an indifference curve? 5. On a graph with x on the horizontal axis and y on the vertical axis, draw a typical indifference curve. Also indicate on your graph whether the indifference curve will intersect either or both axes. Label the curve U1. 6. Are Amy's preferences convex? Are they strictly convex? Explain

Amy consumes x and y and her preferences can be represented by the following utility function U (x, y) = 4x + y. 1. Are Amy's preferences transitive? 2. Does the marginal utility of x diminish, remain constant, or increase as the consumer buys more x? Explain. 3. Can you use (2) to answer whether Amy's preferences are strictly monotonic? 4. What is MRSª.y? Is MRS.y diminishing, constant, or increasing as the consumer substitutes x for y along an indifference curve? 5. On a graph with x on the horizontal axis and y on the vertical axis, draw a typical indifference curve. Also indicate on your graph whether the indifference curve will intersect either or both axes. Label the curve U1. 6. Are Amy's preferences convex? Are they strictly convex? Explain

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 9P

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