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ECN 312 help! A-D

1. (25) Consider the following utility function which specifies Elis preferences over two goods, Xy- lophones (X) and Yo-Yos (Y). (Please note that we call this type of utility function quasi-linear.) U(X, Y) = 10VX + 20% (a) (5) What is the marginal utility of X? Label your answer MUx and draw a box around your answer. What is the marginal utility of Y? Label your answer MUy and draw a box around your answer. What is the marginal rate of substitution of X for Y? Label your simplified answer MRSx,y and draw a box around it (b) (5) What is the slope of the indifference curves when X = 4 and Y-1? Label your answer slope and draw a box around your answer (c) (5) What is the slope of the indifference curves when X = 1 and Y-1? Label your answer slope and draw a box around your answer (d) (10)Start at the bundle described in (c) where X1 and Y-1. How does the slope of the indifference curves change when we increase X while holding Y fixed at 1 In two sentences or less, describe your answer in terms of Elis willingness to give up Y for X. Include an argum ent as to why this intuitively makes sense

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Answer #1

20 lb) 4-1ス RS- LRS 4 MRS 4厅 (x)3/2at x = 1 , y = 1 MRS = 1/4

To get one more unit of x Eli has to give up 4 units of y

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