compare and contrast the marginal rate of substitution of perfect substitutes and perfect compliments. Use diagrams...
compare and contrast the marginal rate of substitution of perfect substitutes and perfect compliments. Use diagrams and algebra to aid your exposition.
Homework Answers
Marginal rate of substitution can be defined as how many units of good x is replaced in order to get the equal quantity of good y without compromising in terms of utility. It can be represented as :
Marginal Rate of substitution (MRS) = 
In case of perfect substitutes, MRS = 1, as 1 unit of good x is replaced by exactly the same unit of good y. The lines are parallel to each other.
In case of perfect compliments, MRS = 0, as there is no replacement possible. The lines are horizontal to each other.
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compare and contrast the marginal rate of substitution
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with the aid of a diagram, differentiate between marginal rate of substitution for perfect substitutes and marginal rate of compliments?
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i) Find the Marginal Rate of Substitution at the given bundle, and ii) use a graph...
i) Find the Marginal Rate of Substitution at the given bundle,
and ii) use a graph to indicate the given bundle,
and accurately draw the indifference curve that
goes through that bundle. Be sure to label you graph carefully and
accurately. In all cases put the amount of good X on the horizontal
axis, and the amount of good Y on the vertical axis.
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(3) Compare and contrast IS elements, simple transposons, and composite transposons. Please use both diagrams and sentences to answer this question. (9 points)
i) Find the Marginal Rate of Substitution at the given bundle,
and ii) use a graph to indicate the given bundle,
and accurately draw the indifference curve that
goes through that bundle. Be sure to label you graph carefully and
accurately. In all cases put the amount of good X on the horizontal
axis, and the amount of good Y on the vertical axis.
c) The consumers utility function is given by U(X,Y)-4X + 2Y and the given bundle is...
7. (4 Points) Describe what the marginal rate of substitution of x for Y (MRSxy) to us about a consumer's preferences between the two goods. 8 (4 Points) Suppose you have preferences over two goods, bottles of wine (good X) and slices of pizza (good Y). Explain what it means that for the bundle A = (3, 15), the MRSxy = 2. 9. For this question, use the utility function U(X,Y)= XY. (a) (2 Points) What is the marginal utility...
4. Consider the utility function U(x,y) -Iny (a) Find the marginal rate of substitution, MRS of this function. Interpret the result (b) Find the equation of the indifference curve for this function (c) Compare the marginal utility of x and y. How do you interpret these functions? How might a consumer choose between z and y as she tries to increase utility by, for example, consuming more when their income increases?
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