Question

Consider the utility function U(x,y) = 3x+y, with MUx=3 and MUy=1

a) Is the assumption that more is better 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 MRS x,y?

d) Is MRS x,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 is not exactly to scale, but it needs to reflect accurately whether there is a diminishing MRS x,y). Also, indicate on your graph whether the indifference curve will intersect either or both exes. label the curve U1.

f) on the same graph draw a second indifference curve U2, with U2> U1.

Answer 1

AS b mue and muy abegrees thono,mence Assempefen dont meee betters Pe fr beth goods of ens con Skant as he consumeci bos mome x. Same. MU Hence dMRS so df ePeence cosve. along om dpee

さ bl Berth obefs.