Question
Consider the following utility functions. Assume x 0, x 0. U(x, x) = (x + 4x) U2(x1,x2) = 5xx U3(x1, x) = x1(x2 +
Consider the following utility functions. Assume x 0, x 0. U(x, x) = (x + 4x) U2(x1,x2) = 5xx U3(x1, x) = x1(x2 + 2) U(x, x) = max{x, x} U5(x, x) = min{3x + x, x + 3x} In your answers, label all intercepts, kinks, coordinates, slopes, and axes. Give an answer to the following two questions for each of the first three utility functions above: 1. Derive an expression for the Marginal Utility of each good. 2. Compute the Marginal Rate of Substitution at the bundle (2,4).
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Personal Financial Planning
Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley
13th edition
1111971633, 978-1111971632
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