Question
Consider the utility function U = 2x + y. a) Is the assumption that more is better (also named monotonicity) satisfied for both goods? b)
Consider the utility function U = 2x + y.
a) Is the assumption that more is better (also named monotonicity) satisfied for both goods?
b) Does the marginal utility of x diminish, remain constant, or increase as the consumer buys more x? Explain.
c) What is MRSx,y ?
d) Is MRSx,y diminishing, constant, or increasing as the consumer substitutes x for y along an indifference curve?
e) On a graph with x on the horizontal axis and y on the vertical axis, draw a typical indifference curve (it does not need to 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 the curve U1.
f ) On the same graph draw a second indifference curve U2, with U2 > U1.
the Square is what is messing me up here i have a solid understanding of the basis of this problem otherwise.
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