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A consumer's preferences are given by the following Cobb-Douglas utility function: 65 11. 11 u(x,y) = 5.5x¹¹ y Assume Px > 0, P, >0, and 1>0. a. In the limit, what is the marginal utility of xas x goes to zero and what is the marginal utility of y as y goes to zero? lim MU= 0 x-0 lim Muy = 0 y-o

A consumer's preferences are given by the following Cobb-Douglas utility function: 65 11. 11 u(x,y) = 5.5x¹¹ y Assume Px > 0, P, >0, and 1>0. a. In the limit, what is the marginal utility of xas x goes to zero and what is the marginal utility of y as y goes to zero? lim MU= 0 x-0 lim Muy = 0 y-o

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A consumer's preferences are given by the following Cobb-Douglas utility function: 65 11. 11 u(x,y) = 5.5 x y Assume Px > 0, P, > 0, and I > 0. a. In the limit, what is the marginal utility of x as x goes to zero and what is the marginal utility of y as y goes to zero? lim MUX = 0 x-0 lim Muy = 0 y-0
Transcribed Image Text:A consumer's preferences are given by the following Cobb-Douglas utility function: 65 11. 11 u(x,y) = 5.5 x y Assume Px > 0, P, > 0, and I > 0. a. In the limit, what is the marginal utility of x as x goes to zero and what is the marginal utility of y as y goes to zero? lim MUX = 0 x-0 lim Muy = 0 y-0
Assume consumer preferences satisfy the assumptions we discussed in class and consider a generic consumer utility maximization problem: max u(x,y) x.y s.t. Pxx +Pyy ≤ 1 x>0, y20 Why do we need a budget constraint? Suppose we didn't have a budget constraint. How much x and y would be consumed and what would be the consumer's utility? =0 u(x". y") = 0 =
Transcribed Image Text:Assume consumer preferences satisfy the assumptions we discussed in class and consider a generic consumer utility maximization problem: max u(x,y) x.y s.t. Pxx +Pyy ≤ 1 x>0, y20 Why do we need a budget constraint? Suppose we didn't have a budget constraint. How much x and y would be consumed and what would be the consumer's utility? =0 u(x". y") = 0 =
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