Question #103362

Given utility function U= where PX = 12 Birr, Birr, PY = 4 Birr and the income of the consumer is, M= 240 Birr. A. Find the utility maximizing combinations of X and Y. B. Calculate marginal rate of substitution of X for Y (MRSX,Y) at equilibrium and interpret your result.

Expert's answer

"MUx\u200b=0.5\\frac{x0.5}{y0.5\u200b}"

"MU_y=0.5 \\frac {x^{0.5}}{y^{0.5}}"

"{\\frac{MU_x}{p_x}}=\\frac {MU_y}{p_y}"

"x \\times p_x+ y \\times p_y=M"

y= 3x

12* x+4*y=240

x=10, y=30

D)

"\\frac {\\partial U}{\\partial x \\partial y} =\\frac {0.25} {(xy)^{0.5}}"

"MRS x.y = \\frac {\\partial U} {\\partial x \\partial y} = \\frac {0.25}{(10 \\times 30)^{0.5}}=0.015"

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## Comments

Rida Awwal01.05.21, 00:28Very nice

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