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Assume Joe derives all his utility from investing in stocks of Dell (denoted by X) and IMB (denoted by Y). His utility function takes the

Assume Joe derives all his utility from investing in stocks of Dell (denoted by X) and IMB (denoted by Y). His utility function takes the form of U=X0.5Y3. Assume X=4 and Y=2.

a. What is the marginal utility of owning one more share of Dell? What is the marginal utility of owning one more share of IMB? What is the marginal rate of substitution between these two stocks?

b. In practice, how does one derive utility from a stock?

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