Compute marginal utilities and marginal rate of substitution for each of the utility functions given below. In each case, explain whether the assumptions of diminishing marginal utility and diminishing marginal rate of substitution are satisfied or not. a) U(X,Y) = 2x³y b) U(X,Y)= XY + 2X + 6Y c) U(X,Y)= (0.2X° + 0.8Y®)¯ d) U(X,Y) = In(2vx + vỸ) %3D
Compute marginal utilities and marginal rate of substitution for each of the utility functions given below. In each case, explain whether the assumptions of diminishing marginal utility and diminishing marginal rate of substitution are satisfied or not. a) U(X,Y) = 2x³y b) U(X,Y)= XY + 2X + 6Y c) U(X,Y)= (0.2X° + 0.8Y®)¯ d) U(X,Y) = In(2vx + vỸ) %3D
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 1WNG
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Transcribed Image Text:Compute marginal utilities and marginal rate of substitution for each of the utility
functions given below. In each case, explain whether the assumptions of
diminishing marginal utility and diminishing marginal rate of substitution are
satisfied or not.
a) U(X,Y)= 2x3y
b) U(X,Y) = XY + 2X + 6Y
c) U(X,Y) = (0.2X® + 0.8Y°)
d) U(X,Y) = In(2vX + vF)
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