Consider the following utility function. U=U(X,Y)=X0.2Y0.8 Find the marginal utilities. Determine their signs. Provide the economic interpretation of the signs of these marginal utilities. Determine whether the law of diminishing marginal utility holds for both goods.
Consider the following utility function. U=U(X,Y)=X0.2Y0.8 Find the marginal utilities. Determine their signs. Provide the economic interpretation of the signs of these marginal utilities. Determine whether the law of diminishing marginal utility holds for both goods.
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 1WNG
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- Consider the following utility function.
U=U(X,Y)=X0.2Y0.8
- Find the marginal utilities.
- Determine their signs.
- Provide the economic interpretation of the signs of these marginal utilities.
- Determine whether the law of diminishing
marginal utility holds for both goods.
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