7. An individual's utility function is given by U =1000x, +450x, +5 x,x, -2x – x where x, is the amount of leisure measured in hours per week and x, is income earned measured in cedis per week. Determine the value of the marginal utilities, when x = 138 and x, = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?

7. An individual's utility function is given by U =1000x, +450x, +5 x,x, -2x – x where x, is the amount of leisure measured in hours per week and x, is income earned measured in cedis per week. Determine the value of the marginal utilities, when x = 138 and x, = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.2P

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An individual’s utility function is given by where is the amount of leisure measured in hours per week and is income earned measured in cedis per week. Determine the value of the marginal utilities, when = 138 and = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?
. An individual's utility function is given by u = 1000 x, + 450 x. + 5x, x. - 2x-x where x, is the amount of leisure measured in hours per week and x,is income earned measured in cedis per week. Det er mine the value of the marginal utilities, when x, = 138 and x= 500. Hence est imate the change in utility if the individual works for an extra hour, which increa ses earned income by GH¢ 15 per week. Does the law of diminishing ut ility hold for this function? %3D
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