Answer to Question #246361 in Microeconomics for SUSAN

Question

 Consider the utility function U (x, y) = 3x² + 5y with MUx = 6x  and MUy  = 5 .

Required a)  Is the assumption that ‘more is better’ satisfied for both goods?

b) What is MRSx, y for this utility function? 

c) What does the MRS_x,y tell us?

d)  Is the MRSx,y  diminishing, constant, or increasing as the consumer substitutes x for  y along an indifference curve? why 

e) Will the indifference curves corresponding to this utility function be convex to the origin (bowed toward the origin), concave to the origin (bowed away), or straight lines? Explain.

Answer 1

a) MU_x and MU_y are both positive meaning more is better. Therefore  it is satisfied for both goods.

b) $MRS=\frac{ MUx}{MUy}= \frac{6x}{5}=1.2x$

c)MRS shows slope of the indifference curve at any single point along the curve

d)the MRS is decreasing as consumer substitutes X for Y

e) The indifference curves are will be convex because as you consume more of one good you will consume less of the other. .