How to find the marginal utility of x and y

Asked by admin @ 28/10/2021 in Business viewed by 277 People

Given the following utility function: U = 10X + 2Y and marginal utilities: MU_x = 10, MU_y = 2 A consumer facing the following prices: P_x = $1, P_y =2 chooses to consume: 11 units of good X and 16 units of good Y. Assume that graphically good X is on the horizontal axis and good Y is on the vertical axis. Given this consumption bundle, the marginal rate of substitution is equal to - (Note that the minus sign is already included.).

Answered by admin @ 28/10/2021

Answer:

Explanation:

In economics, the marginal rate of substitution (MRS) refers to the unit of good X that a consumer is ready to give up in order to consume an additional unit of good Y in order to maintain the same level of satisfaction.

Since it is assumed graphically that good X is on the horizontal axis and good Y is on the vertical axis, the MRS of good X for good Y is given as follows:

MRSx,y = - (dy/dx) = MU_x/MU_y ................................................ (1)

Where,

MRSx,y = marginal rate of substitution of X for Y = ?

Marginal utility of X = MU_x = 10

Marginal utility of Y = MU_y = 2

Substituting the values into equation (1), we have:

MRSx,y = 10/2 = 5

Note that since the minus sign is already included, this gives us -5 and it is interpreted that the consumer is ready to give up 5 units of Y to have an extra unit of X.

Able, baker, and charles are engaged in the marketing to and enrollment of beneficiaries into medicare health plans. mr. able is an independent agent paid directly by a health plan. ms. baker is an independent agent paid through a field marketing organization (fmo). mr. charles is an independent agent paid for his work by a third-party marketing organization (tmo). how do the cms compensation rules apply to these three agents?

Asked by maham237 @ 13/01/2021 in Business viewed by 2752 persons

How to find the marginal utility of x and y

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