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The utility function is U=f(x,y) Bundle 1 and Bundle 2 , are on the same indifference curve U o =f(x 1 , y 1 )=f(x
The utility function isU=f(x,y)
Bundle 1 and Bundle 2 , are on the same indifference curve Uo=f(x1, y1)=f(xz, y2)
Bundle 3 is an equal combination of Bundle 1 and Bundle 2
Bundle 3 = 50% of Bundle 1 + 50% of Bundle 2
Utility of Bundle 3 U3=f(x3, y3)
MUX > 0 and MUY > 0 and U3=Uo
Draw theindifference curve, accurately showing the given information and the locations of bundles 1, 2, and 3. Explain your reasoning.
Does this utility function display diminishing marginal utility? Please explain.
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