An individuals utility function is given by U = 340x1 + 960x2 + 2x1x2 – 2x – x;/2, - - when the weekly amount of leisure is x1 = 132 and earned income is x2 = 760 answer the

ENGR.ECONOMIC ANALYSIS
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An individuals utility function is given by
U =
340x1 + 960x2 + 2x1x2 – 2x – x3/2,
= 132
when the weekly amount of leisure is x1
and earned income is x2
= 760 answer the
following:
1. The marginal utility of x1 is
2. The marginal utility of x2 is
3. Use the small increments formula to
estimate the change in the utility when x1
decreases by 1 and x2 increases by 4. The
change
4. Does the law of diminishing marginal
utility hold?
5. The MRCS at a given values is
Enter non-integer numerical values as decimals
to at least 3 decimal places. Note: you must
use a. and not , for a decimal point.
Transcribed Image Text:An individuals utility function is given by U = 340x1 + 960x2 + 2x1x2 – 2x – x3/2, = 132 when the weekly amount of leisure is x1 and earned income is x2 = 760 answer the following: 1. The marginal utility of x1 is 2. The marginal utility of x2 is 3. Use the small increments formula to estimate the change in the utility when x1 decreases by 1 and x2 increases by 4. The change 4. Does the law of diminishing marginal utility hold? 5. The MRCS at a given values is Enter non-integer numerical values as decimals to at least 3 decimal places. Note: you must use a. and not , for a decimal point.
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