Question

Given utility function U=144q-1.5qsquared

Find marginal utility

Calculate the utility maximising quantity

What is marginal rate of substitution

Answer 1

I) marginal utility;

$MU=\frac{\delta U}{\delta q}$

$=144-3q$

ii)Utility maximizing quantity

$q=\frac{144}{3}$

$=48$

iii) marginal rate of substitution

Marginal rate of substitution (MRS) is the amount of a good that a consumer is willing to consume compared to another good, as long as the new good is equally satisfying.