You consume music (M) and concert tickets (C). Your utility function is U(M, C) = M1/4C3/4. The marginal utility for concert tickets, MUC is MUC =3/4C-1/2M1/4 and the marginal utility for music, MUM is MUm = 1/4C3/4M-3/4 (a) Calculate MRSMC using only the given marginal utilities. (b) Solve for the utility of bundle A where M = 16 and C = 16. Solve for your utility at bundle B where M = 128 and C = 8. Are the utilities the same? (c) Calculate MRSMC at bundle A and at bundle B. Are they the same?
You consume music (M) and concert tickets (C). Your utility function is U(M, C) = M1/4C3/4. The
(a) Calculate MRSMC using only the given marginal utilities.
(b) Solve for the utility of bundle A where M = 16 and C = 16. Solve for your utility at bundle B where M = 128 and C = 8. Are the utilities the same?
(c) Calculate MRSMC at bundle A and at bundle B. Are they the same?
(d) Are your indifference
A consumer maximizes her or her utility given his or her budget constraint at the point where the slope of his indifference curve equals the slope of his budget line. Mathematically, it is
Px/Py = MUx/MUy
Where Px is the price of good X, Py is the price of good Y. MUx is the marginal utility from good X and MU is the marginal utility from good Y.
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