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Diminishing marginal utility is a necessary condition

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Reference no: EM131061779

Find the  MUx , MUy, and MRS equations for each of the following utility functions.

a. U = x0.6y0.4.

b. U = x2 + y2x,y>0.

c. U = 2x + 4y.

d. U = x2y2.

e. U = xayb.

1. For (a)-(d), which of the  utility functions exhibit diminishing marginal utility for good X? Hint: Using your equation for MUx, determine if MUx falls as X rises.

2. Which of the above utility functions exhibit diminishing MRS? (That is, which of the above yield convex indifference curves?).

3. Do you think diminishing marginal utility is a necessary condition to get diminishing MRS? Use your answers for (a), (d), and (e) to justify your answer.

Reference no: EM131061779

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