If the utility function is given by , which is true about the marginal rate of substitution (MRS) between two commodities and at positive level of consumption and also the nature commodities?
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1 mark, −0.33MicroeconomicsConsumer preferences and utilityPerfect substitutes, complements and lexicographic preferencesEasyabout 1 min
UoH 2020 Question 3: Consumer preferences and utility
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If the utility function is given by U(x₁, x₂) = x₁ + x₂, which is true about the marginal rate of substitution (MRS) between two commodities x₁ and x₂ at positive level of consumption and also the nature commodities? (A) MRS is constant at 1 and commodities are perfect complements (B) MRS is constant at 1 and commodities are perfect substitutes (C) MRS is not constant and commodities are substitutes (D) MRS is not constant and commodities are complements
Also written as: If the utility function is given by U(x_1, x_2) = x_1 + x_2, which is true about the marginal rate of substitution (MRS) between two commodities x_1 and x_2 at positive level of consumption and also the nature commodities?
Consumer preferences and utility has come up 93 times in 7 exams since 2007.
What this question tests
This question is on Perfect substitutes, complements and lexicographic preferences, part of Consumer preferences and utility in Microeconomics.
Preferences that give straight-line, L-shaped or dictionary-ordered indifference sets, and how they differ from standard ones.
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