A consumer's utility function is given by the expression: U = (0.6x*s + 0.4Y*s)*. • Determine the marginal utility functions for each commodity. Does marginal utility decrease when consumption increases? • Assuming that the price of good X is Rs 15 and the price of Y is Rs 6, write the equation of the budget line and plot it when income is Rs 450. What is its slope? What does it indicate? • Calculate the marginal rate of substitution of Y for X and interpret its economic meaning. Write the equation showing consumer's equilibrium condition.

A consumer's utility function is given by the expression: U = (0.6xs + 0.4Ys)*. • Determine the marginal utility functions for each commodity. Does marginal utility decrease when consumption increases? • Assuming that the price of good X is Rs 15 and the price of Y is Rs 6, write the equation of the budget line and plot it when income is Rs 450. What is its slope? What does it indicate? • Calculate the marginal rate of substitution of Y for X and interpret its economic meaning. Write the equation showing consumer's equilibrium condition.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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