Utility is given by the function U(x,y) = x0(y + 4)0³. a. Calculate the marginal utility of x in terms of x and y. Simplify. b. Calculate the marginal utility of y in terms of x and y. Simplify. c. Calculate the marginal rate of substitution in terms of x and y. Simplify. а. с.
Utility is given by the function U(x,y) = x0(y + 4)0³. a. Calculate the marginal utility of x in terms of x and y. Simplify. b. Calculate the marginal utility of y in terms of x and y. Simplify. c. Calculate the marginal rate of substitution in terms of x and y. Simplify. а. с.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Utility is given by the function U(x,y) = x0(y + 4)0.3.
a. Calculate the marginal utility of x in terms of x and y. Simplify.
b. Calculate the marginal utility of y in terms of x and y. Simplify.
c. Calculate the marginal rate of substitution in terms of x and y. Simplify.
Expert Solution
Step 1
Marginal utility is the addition to the total utility when one more unit is purchased.
Marginal utility of x (MUx ) shows how the total utility changes when one more unit of x is purchased keeping y constant.
Marginal utility of y (MUy ) shows how the total utility changes when one more unit of x is purchased keeping y constant.
Marginal rate of substitution (MRS) shows how much consumer are willing to sacrifice good y for increasing one more unit of good x.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education