Search results with tag "Marginal rate of substitution"
Capps Fall 2013 - Test #1 ANSWER KEY
agecon2.tamu.edu(b) the law of diminishing marginal utility (c) Engel’s law (d) none of the above. 27. Which of the following statement(s) is (are) true? (a) The marginal rate of substitution is always negative. (b) Indifference curves never intersect. (c) When total utility reaches a maximum, marginal utility is zero. (d) All of the above . 28.
NOTES FOR MICROECONOMICS 2011 - New York University
neconomides.stern.nyu.eduNote that the marginal rate of substitution (MRS) of consumer Z depends on individual preferences as expressed by the indifference curves. It does not depend on the market or the prices that may prevail in the market. 11. An additional unit of good X increases the level of satisfaction of a consumer by the marginal utility of X, MUx. Similarly ...
Problem Set 2: Solutions Problem 1 (Marginal Rate of ...
www.ssc.wisc.eduProblem 1 (Marginal Rate of Substitution) (a) For the third column, recall that by de nition MRS(x 1;x 2) = @U @x1 @U @x2 . Utility Function @U @x 1 @x 2 MRS(x 1;x 2) MRS(2,3) (i) U(x 1;x 2) = x 1x 2 x 2 x 1 x 2 x 1 3 2 ... (Marginal utility per dollar spent is equalized.) { Note: An equivalent way of writing this is MU 1 MU 2 = p p 2 (using ...
CONSUMER PREFERENCES - University of Southern Indiana
www.usi.eduThe marginal rate of substitution reflects the maximum amount of good Y the consumer would be willing to give up in order to obtain an additional unit of X. The consumer would be happy to give less Y since it would place the consumer above U1 at a higher utility level. However, the
Economics 103 Final exam ANSWER KEY - Simon Fraser …
www.sfu.ca22) Leah consumes at a point on her budget line where her marginal rate of substitution is less than the magnitude of the slope of her budget line. As Leah moves towards her best affordable point, she will move to A) a lower budget line. B) a higher budget line. C) a lower indifference curve. D) a higher indifference curve.
Utility Maximisation Problem - UCLA Economics
www.econ.ucla.eduGood 1 has per{unit price p1 = 2 for x1 < 10, and per{unit price p1 = 1 for x1 ... where the marginal rate of substitution is evaluated at the optimal choice, (x ...
MARGINAL UTILITY AND MRS (detailed notes)
www.sfu.caThe marginal rate of substitution is equal to the ratio of the marginal utilities with a minus sign. Thus even though the marginal utilities have no behavioral content their ratio does - it measures the rate at which a consumer is willing to substitute between the two goods. 2.