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Economics Homework

Forums: Economics, Homework, Utility, Indifference Curve
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vanitymdl
 
Reply Sun 17 Feb, 2013 11:23 pm
Kelly's utility function is given by U=5X+2Y, where MUx=5 and MUy=2

What is MRSxy when X=1 and Y=5?
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Type: Question • Score: 0 • Views: 4,828 • Replies: 1
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lacroft
 
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Reply Mon 15 Jul, 2013 06:19 pm
@vanitymdl,
MRSxy is (dU/dX)/(dU/dY)

In this case:
(dU/dX)/(dU/dY) = 5/2
because the utility function is linear.

MRSxy will be 2.5 no matter in which point of the utility curve we are.

Regards!
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