The utility function , for , exhibits
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1 markMicroeconomicsConsumer preferences and utilityMarginal rate of substitution and convexityModerateabout 3 min
DSE 2010 Question 17: Consumer preferences and utility
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The utility function u(x,y)=(x+y)^(1/2), for (x,y)≥ (0,0), exhibits (A) diminishing marginal rate of substitution and diminishing marginal utilities (B) increasing marginal rate of substitution and diminishing marginal utilities (C) constant marginal rate of substitution and diminishing marginal utilities (D) increasing marginal rate of substitution and constant marginal utilities
Also written as: The utility function u(x,y)=(x+y)^(1/2), for (x,y)>= (0,0), exhibits
Consumer preferences and utility has come up 93 times in 7 exams since 2007.
What this question tests
This question is on Marginal rate of substitution and convexity, part of Consumer preferences and utility in Microeconomics.
The rate at which a consumer trades one good for another, and why it diminishes along a convex indifference curve.
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