ion 8 (Utility). Suppose a consumer's utility function is given by U(x₁, x2)=X₁*X2 a) Draw an indifference curve with a value of 10 and an indifference curve with a value of 16. Label two points on each indifference curve as well as the axes. 10 $16 U₂ ) What is the marginal utility with respect to x₁? What is the marginal utility with respect to x2? What is the marginal utility of x, and x2 at the point (10, 5)? the morginal utility of xq is lo wh X₂ is x₂ = 10 while x₂ = 5² 1s. So the morginal utility of the andaz of the point (10,5) are
ion 8 (Utility). Suppose a consumer's utility function is given by U(x₁, x2)=X₁*X2 a) Draw an indifference curve with a value of 10 and an indifference curve with a value of 16. Label two points on each indifference curve as well as the axes. 10 $16 U₂ ) What is the marginal utility with respect to x₁? What is the marginal utility with respect to x2? What is the marginal utility of x, and x2 at the point (10, 5)? the morginal utility of xq is lo wh X₂ is x₂ = 10 while x₂ = 5² 1s. So the morginal utility of the andaz of the point (10,5) are
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.4P
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Can you help me answer these 2 questions
Transcribed Image Text:tion 8 (Utility). Suppose a consumer's utility function is given by U(x₁, x2)=X1*X2
a) Draw an indifference curve with a value of 10 and an indifference curve with a value of 16. Label two
points on each indifference curve as well as the axes.
10
+16
VI
U₂
with respect to What is the
What is the marginal utility with respect to x,₁? What is the magial utility of x2 is louh te
marginal utility of x, and x2 at the point (10, 5)? the morgin
X₂ is ks. So the marginal utility of toy andaz of the point (10,5) are
x₂ = 10 while x₂=5²
n 9 (Utility). A consumer's indifference curve representing a utility of 10 is given in the following graph
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Introduction
An indifference curve (IC) is a mathematical representation of a collection of products that give consumers comparable levels of satisfaction, leading to their indifference. A consumer or person is indifferent between the two components at each point just on the indifference curve (IC) because they provide the same kind of benefit.
And, a consumer's increased enjoyment from owning one extra unit of a product or service is known as marginal utility. Economists utilize the idea of marginal utility to estimate how much of a given good buyers are willing to buy.
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