Complete each of the following problems showing ALL your work. Answer the following questions related to the utility function: U(x, y) = 0.5x0.40.6 a. Does the marginal utility of x increase, remain constant, or diminish as the consumer buys more units of x? Explain. b. Does the marginal utility of y increase, remain constant, or diminish as the consumer buys more units of y? Explain. c. Provide an expression for the marginal rate of substitution of x for y

Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
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Complete each of the following problems showing ALL your work. Answer the following questions
related to the utility function: U(x, y) = = 0.5x0.40.6
a. Does the marginal utility of x increase, remain constant, or diminish as the consumer buys more units
of x? Explain.
b. Does the marginal utility of y increase, remain constant, or diminish as the consumer buys more units
of y? Explain.
c. Provide an expression for the marginal rate of substitution of x for y
Transcribed Image Text:Complete each of the following problems showing ALL your work. Answer the following questions related to the utility function: U(x, y) = = 0.5x0.40.6 a. Does the marginal utility of x increase, remain constant, or diminish as the consumer buys more units of x? Explain. b. Does the marginal utility of y increase, remain constant, or diminish as the consumer buys more units of y? Explain. c. Provide an expression for the marginal rate of substitution of x for y
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