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ECON3200001.1251 Midterm Exam I
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Kelly’s utility function is given by U= 5X + 2Y, where MUX = 5 and MUY = 2. Given this utility function, we can say that: The MRSXY is: 2.5 The MRSXY when X= 1 and Y = 5 is: [选择] 2.5 2 4.5 5 The MRSXY when X = 2 and Y = 2.5 is: [选择] 2.5 5 2 3
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Step-by-Step Analysis
To analyze this question, first restate the setup: Kelly’s utility is U = 5X + 2Y, which implies MUx = 5 and MUy = 2.
Option 1 asks for the MRSXY in general. The marginal rate of substitution MRSXY is defined as MUx / MUy for a linear (or any differentiable) utility function when preferences are smooth. Here MUx/MUy = 5/2 = 2.5, so th......Login to view full explanationLog in for full answers
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