Question
Charlotte spends her income of $2400 on clothing (good x ), and the composite good (good y ). The utility Charlotte receives from consuming a
Charlotte spends her income of $2400 on clothing (goodx), and the composite good (goody). The utility Charlotte receives from consuming a basket of clothing and the composite good is
U(x,y) = 2x + (y/300)
The corresponding marginal utilities are
MUx = 1/x and MUy = 1/300
Question: Is the 'principal of diminishing marginal utility' satisfiedforboth clothing and the composite good?
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Authors: Jeffrey F Beatty, Susan S Samuelson
3rd Edition
0324537115, 9780324537116
