Answer to Question #193985 in Microeconomics for Henderson

Question

An individual’s utility function is given by where is the amount of leisure measured in hours per week and is income earned measured in cedis per week.

 Determine the value of the marginal utilities, when = 138 and = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?

Answer 1

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