Answered: Given the following Cobb Douglas…

Business

Economics

Given the following Cobb Douglas Utility function u(x1, x2) = x1cx2d.What is Marginal Rate of Substitution MRS x1, x2

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 1WNG

See similar textbooks

Related questions

Q: Mary has two dinner options available: eating a home cooked meal for $150 per meal, or at a…

A: Good X = home cooked good Good y = restaurant meal Equation of budget line : 150x+ 260y = 2500

Q: Question 1 Calculate the marginal rate of substitution (MRS12) for the following utility function:…

A: Answer: Given, Utility function:Uq1,q2=74q1+0.6q22 To find the MRS let us find the marginal…

Q: Certain individuals have been observed to increase their consumption of goods whenever their price…

A: The income effect defines how changes in relative income and prices affect consumption, whereas the…

Q: Suppose that the following a quasi-linear utility function is given U(X,Y) = U(X,)=-x-²-y-,Find…

A: We are going to solve above question using Marginal Rate of Substitution formula.

Q: The marginal rate of substitution (MRS) is not dependent on the transformation of a particular…

A: Answer: True, Explanation: A monotonic transformation of a particular utility function does not…

Q: If the marginal utility function of an individual takes the form U = U (x1, x2) = (x1 + 2)2 (x2 +…

A: Given, the utility function: U=U(X1, X2)=(X1+2)2(X2+3)3 i) Marginal Utilities: MUX1…

Q: Could the marginal rate of substitution be 5 at point C? Justify your answer

A: Optimal choice - It is the best combination of goods which will lead to the best satisfaction of the…

Q: It is proven mathematically that indifference curves are convex due to: (a) rising marginal rates of…

A: An indifference curve is the locus of all those points which represents the different bundle of two…

Q: umer has the utility function U(x1.x2)=10(x1)°(x2)² rginal utility of x1 (MU;) is which of the…

A: (3) a) U (X1 , X2) = 10(X1)3(X2)2 MU1= ∂(U)∂x1= 10(X2)2 3(X1)2Taking partial…

Q: For the utility function U(X,Y)= 6X0.50.5, the marginal rate of substitution MRSxy is: O Y/X. O X/Y.…

A: Given:- Utility function, U(X,Y)=6X0.5Y0.5 To calculate:- MRSxy=?

Q: Suppose you have the following Utility function: U = U(x, y) = (x − γ) ^α (y − δ) ^β (a) Write…

A: U(x, y) = (x − γ)α (y − δ)β Total Differential : dU=[∂U/∂x]dx+[∂U/∂y]dy ∂U/∂x=α(x − γ)α-1(y − δ)β…

Q: Suppose that the following utility function is given U(X,Y) = x +Y. Which of the following is…

A: D) We have non-convex preferences since Law of diminishing Marginal Rate of Substitution fails to…

Q: Can you explain why taking a monotonic transformation of a utility function doesn’t change the…

A: Monotonic transformation of the utility function is the transformation of one function into other…

Q: alculate the marginal rate of substitution (MRS12) for the following utility function: U(q1,q2)=…

A: Marginal rate of substitution refers to the slope of an indifference curve. It is calculated as the…

Q: Mrs. Griffiths earns $5000 a week and spend her entire income on dresses and handbags. Since these…

A: The budget constraint shows the combinations of two goods that an individual is able to purchase…

Q: Discuss the following statements : explain whether the statement is TRUE or FALSE, and provide…

A: Two utility functions that provide the same rank ordering of consumption bundles are positive…

Q: Calculate the marginal rate of substitution if the consumer is will to leave good y from 100 to 60…

A: Utility refers to the satisfaction. The aim of the consumer is to maximize their utility. The…

Q: Joe Bob has a utilityfunction given by u(x1, X2) = x1 + 2x1x2 + x2. a. Compute Joe Bob's marginal…

A: Marginal rate of substitution is the rate at which consumer is willing to substitute one good for…

Q: he rate of market substitution is: The consumer’s marginal utility The…

A: The rate which depicts the amount of one good being substituted for another good and is being used…

Q: ity = XY + 3X. If prices of X and Y are Birr 4 and Birr 2 respectively; and if a consumer has an…

A: Utility refers to the satisfaction. The aim of the consumer is to maximize the utility given the…

Q: Suppose a consumer's labor supply is negatively sloped, meaning as wage increases, the consumer…

A: An individual trades off between labor and leisure, with a given amount of work hours. The labor…

Q: The theory of consumer choice examines the tradeoffs inherent in decisions made by consumers. For…

Q: Assume when the price of dresses decreases, less of that good is demanded. Illustrate the income and…

A: When the price of dresses decrease, then without checking the other factors, if we consider the own…

Q: A consumer chooses an optimal consumption point where the marginal rate of substitution equals the…

A: Budget line shows different combinations of goods that a consumer can purchase with the given budget…

Q: Suppose that the following utility function is given U(X,Y) = x2+Y Which of the following is…

A: A utility function is said to be convex utility preference if its quasi concave which implies the…

Q: Timothy has a utility function that depends on the number of musicals and the number of operas seen…

A: Introduction- Utility is determined by a consumer, on the basis of happiness or satisfaction that he…

Q: What is the marginal rate of substitution (MRS) for the utility function U(x, y) = x° + y®? The…

A: Given: The utility function is: Ux, y = xp + yp To Find: The marginal rate of substitution of Good x…

Q: Calculate the marginal rate of substitution (MRS12) for the following utility function: U(q1, 42) =…

A: Here, utility function is given as: U(q1, q2)=4q1+√q2 To find: MRS(1,2) at the bundle (13, 2)

Q: Suppose preferences do not exhibit diminishing marginal rate of substitution. Can we set MRS=n to…

A: The Golden Rule Bundle is defined as the best bundle offered by the Indifference curve to the…

Q: Suppose that the following utility function is given U(X,Y) = X//3y1/2, which of the following is…

A: Given Utility function U=x1/3y1/2 ......... (1)

Q: Diminishing marginal rate of substitution for a good means: I. decreasing the quantity of a…

A: Generally, marginal substitution is reducing, which means a shopper picks the substitute instead of…

Q: T/F Explain If preference is strongly convex, the utility function will exhibit dimin- ishing…

A: The satisfaction or benefit acquired from consuming a product is referred to as utility;…

Q: A KU student maximizes his sporting utility by playing Golf (G) and Tennis (T). His function is…

A: The maximum utility that a person can possibly experience given a certain price, quantity, and…

Q: when is the substitution effect greater than the income effect?

A: Income Effect is the change in the demand caused due to purchasing power of the consumer due to…

Q: Consider an indifference curve for someone deciding how to allocate time between work (and thus…

A: As the wages increase, the person would be willing to work more to earn more wages. So, he will give…

Q: If the utility function (U) between food (F) and clothing (C) can be represented as U =2F + 9C, the…

A: The utility is the amount of satisfaction received by the consumers from the consumption of goods…

Q: Gabby has the utility function U(X,Y) = X0.y0.26 When Gabby consumes X= 5 and Y=8 she has a marginal…

A: MRS = (MUx)/(MUy) MUx = dU/dx = Y0.25.0.5X(0.5-1) = 0.5Y0.25X(-0.5) MUy = dU/dy =…

Q: The shape of a person's indifference curves between two goods depends on A) the marginal rate of…

A: Government has certain tax revenue with them through which they have to carry expenditure on…

Q: Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these…

A: Indifference curve refers to the curve which shows all the possible combination of two goods that…

Q: r derives from successive units of a product. consumer's willingness to substitute one…

A: Marginal rate of substitution: The Marginal Rate of substitution can be defined as the rate at which…

Q: Consider the following utility function: U= 4X+Y. A consumer faces prices of P,= $2 and P, =1. %3D…

A: Answer: Given, Utility function: U=4X+Y The formula of the marginal rate of substitution (MRS) is…

Q: Jason has the following utility function: U = F2C where F is food and C is clothing. Clothing is…

A: The marginal rate of substitution (MRS) is that the quantity of smart|an honest|a decent} that a…

Q: Jane receives utility from days spent traveling on vacation domestically (D) and days spent…

A: The marginal rate of substitution is the ratio of marginal utility of good x to the marginal rate of…

Q: If the price of good X is $40 and the price of good Y is $35 Find the value of Marginal rate of…

A: The information being given is:- Price of good (Px ) = $40 Price of good (Py ) = $35 We have to…

Q: Suppose the function for the utility from good c is denoted as U(c)=2c1/2 . Which of the following…

A: Given Utility function: U(c) = 2c1/2. ..... (1) Where have to find marginal utility from good c

Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Given the following Cobb Douglas Utility function u(x₁, x₂) = x₁^cx₂^d.What is Marginal Rate of Substitution MRS x₁, x₂?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Find utility functions given each of the following indifferencecurves [defined by U()=k ]: a. z=k1/x/y/ b. y=0.5x24(x2k)0.5x c. z=y44x(x2yk)2xy22x
Given U(c, t)=3c+4t expalin what the utility function says about the marginal rate of substitution.
alculate the marginal rate of substitution (MRS12) for the following utility function: U(q1,q2)= 60q1+ 0.2(q2)2 What is the value of MRS12 at bundle (4, 3)?
Please solve all parts (d and e) Find the marginal rate of substitution of y for x [MRS(x,y)] for the following utility functions
Consider a utility function given by:
Calculate the marginal rate of substitution (MRS12) for the following utility function: U(q1, 42) = 4q1 + 2. What is the value of MRS12 at bundle (13, 2)? Please round your answer to two decimal places if necessary.
Can you explain why taking a monotonic transformation of a utility function doesn’t change the marginal rate of substitution?
For the utility function U(X,Y)= 6X0.50.5, the marginal rate of substitution MRSxy is: O Y/X. O X/Y. 3Y/X. O3X/Y.
Define the Marginal Rate of Substitution between two goods (X and Y).If a consumer’s preferences are given by U(X,Y) = X1/4Y 3/4, compute the consumer’s marginalrate of substitution as a function of X and Y. Calculate the MRS if the consumer has chosen toconsumer 12 units of X and 30 units of Y.
For the utility function (x^3)(z^2)Provide a positive linear transformation of the utility function, then, provide a nonlinear monotone transformation of the utility function.
A consumer’s indirect utility function is given by
if the utility function is given by u=x^2y^2 what is marginal utility?