on to the main solution, we have been given а Coming perfect substitute utility function. Remember, if any utility function Ujs in the form: U = ax + by, then it means that goods X and Y are perfect dubstitutes each other. The utility curive in this case is represented by a down ward sloping straight line. At every point on the curve, the MRS remains constant, unlike a regular convex - Utility curve, in which MARS reduces from left to right of Note: when a consumer. faces perfect dubstitute utility function, then he/she Consumes at the corner point. It depends upon the ratio between o Marginal Utilities of particular good respective police. мох For eg. if, Px if, MUY > Pr U(X,Y)= 4x+ 3 Y MUX = JU(x, y) _ 4 ১U(X, = dx мож Py мох Px Corner Points ) 1 U=ax+by and its ^ Corner points then only x good is consumed MOY = ১০(XY) = 3 Y then only Y-good is consumed.
on to the main solution, we have been given а Coming perfect substitute utility function. Remember, if any utility function Ujs in the form: U = ax + by, then it means that goods X and Y are perfect dubstitutes each other. The utility curive in this case is represented by a down ward sloping straight line. At every point on the curve, the MRS remains constant, unlike a regular convex - Utility curve, in which MARS reduces from left to right of Note: when a consumer. faces perfect dubstitute utility function, then he/she Consumes at the corner point. It depends upon the ratio between o Marginal Utilities of particular good respective police. мох For eg. if, Px if, MUY > Pr U(X,Y)= 4x+ 3 Y MUX = JU(x, y) _ 4 ১U(X, = dx мож Py мох Px Corner Points ) 1 U=ax+by and its ^ Corner points then only x good is consumed MOY = ১০(XY) = 3 Y then only Y-good is consumed.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 3SQP
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