ECONOMICS: Marginal Utility Generally, the more you have of something, the less valuable each additional unit becomes. For example, a dollar is less valuable to a millionaire than to a beggar. Economists define a person’s “utility function” U(x) for a product as the “perceived value” of having x units of that product.
The derivative of U(x) is called the marginal utility function, MU(x) = U’(x). Suppose that a person’s utility function for money is given by the function below. That is, U(x) is the utility (perceived value) of x dollars.
a. Find the marginal utility function MU(x).
b. Find MU(1), the marginal utility of the first dollar.
c. Find MU(1,000,000), the marginal utility of the millionth dollar.
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