Consider the following utility function U(x, y) = x 0.4 y 0.6 .

Is the assumption that more is better satisfied for both goods?

Does the marginal utility of x diminish, remain constant, or increase as the consumer buys more x? Explain.

What is MRSx, y?

Is MRSx, y diminishing, constant, or increasing as the consumer substitutes x for y along an indifference curve?

On a graph with x on the horizontal axis and y on the vertical axis, draw a typical indifference curve (it need not be exactly to scale, but it needs to reflect accurately whether there is a diminishing MRSx, y). Also indicate on your graph whether the indifference curve will intersect either or both axes. Label