A utility function is given by the equation U = 20xe¬0.1x, where x is the number of glasses o wine consumed. (a) Show that this utility function has a maximum value and calculate the maximum utility. (b) Describe how marginal utility changes for glasses of wine consumed after the maximun utility is reached. Do you consider this reasonable? Give an explanation.
A utility function is given by the equation U = 20xe¬0.1x, where x is the number of glasses o wine consumed. (a) Show that this utility function has a maximum value and calculate the maximum utility. (b) Describe how marginal utility changes for glasses of wine consumed after the maximun utility is reached. Do you consider this reasonable? Give an explanation.
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 1WNG
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