Consider the utility function U(r, g) = r+ Iny. (a) Find the marginal rate of substitution, MRS of this function. Interpret the result (b) Find the equation of the indifference curve for this function (c) Compare the marginal utility of r and y. How do you interpret these funct ions? How might a consumer choose between e and y as she tries to increase utility by, for example, consuming more when their income increases?

Consider the utility function U(r, g) = r+ Iny. (a) Find the marginal rate of substitution, MRS of this function. Interpret the result (b) Find the equation of the indifference curve for this function (c) Compare the marginal utility of r and y. How do you interpret these funct ions? How might a consumer choose between e and y as she tries to increase utility by, for example, consuming more when their income increases?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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