PROBLEM (2) A consumer has utility u(x,y)X yThis time, I give you the marginal utilities (don't expect it in the midterm!) MUx=over bundles of food (x) and clothing (y).1and MUYx²(a) Does the consumer always prefer more food to less?(b) Does she exhibit diminishing marginal utility for food?(c) Does she exhibit diminishing MRS?(d) If she is indifferent between the bundles A = (==The more food she has, does she value food less relative to clothing? (That is, she is willing to give up fewerunits of clothing for an additional unit of food) Circle: YES / NOAre her indifference curves bowed towards the origin? Circle: YES / NO¹) and B = (¹,x), calculate x.,341y²(e) Does she value food -relative to clothing- the same at bundle A and B ? If not, at which bundle does shevalue food (relative to clothing) more?(f) Why should we not be worried about the fact that the utility function here always takes "negative values"?(g) (wait for the next class for us to cover utility maximization, ch 4. !) Suppose the prices are px = $8 per unit,and py = $2 per unit and she has income I = $12. What bundle (of food and clothing) would she optimallychoose?

Since you have posted a question with multiple sub parts, we will provide the solution only to the…

PROBLEM (2) A consumer has utility u(x,y) = -- over bundles of food (x) and clothing (y). This time, I give you the marginal utilities (don't expect it in the midterm!) MU× = 1/2 and MUy = ; (a) Does the consumer always prefer more food to less? (b) Does she exhibit diminishing marginal utility for food? (c) Does she exhibit diminishing MRS?

PROBLEM (2) A consumer has utility u(x,y) = -- over bundles of food (x) and clothing (y). This time, I give you the marginal utilities (don't expect it in the midterm!) MU× = 1/2 and MUy = ; (a) Does the consumer always prefer more food to less? (b) Does she exhibit diminishing marginal utility for food? (c) Does she exhibit diminishing MRS?

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Chapter1: Making Economics Decisions

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Question

PROBLEM (2) A consumer has utility u(x,y)
X y
This time, I give you the marginal utilities (don't expect it in the midterm!) MUx
=
over bundles of food (x) and clothing (y).
1
and MUY
x²
(a) Does the consumer always prefer more food to less?
(b) Does she exhibit diminishing marginal utility for food?
(c) Does she exhibit diminishing MRS?
(d) If she is indifferent between the bundles A = (
=
=
The more food she has, does she value food less relative to clothing? (That is, she is willing to give up fewer
units of clothing for an additional unit of food) Circle: YES / NO
Are her indifference curves bowed towards the origin? Circle: YES / NO
¹) and B = (¹,x), calculate x.
,
3
4
1
y²
(e) Does she value food -relative to clothing- the same at bundle A and B ? If not, at which bundle does she
value food (relative to clothing) more?
(f) Why should we not be worried about the fact that the utility function here always takes "negative values"?
(g) (wait for the next class for us to cover utility maximization, ch 4. !) Suppose the prices are px = $8 per unit,
and py = $2 per unit and she has income I = $12. What bundle (of food and clothing) would she optimally
choose?

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