Asked by
SuF iYaN Ansari
on Oct 14, 2024Verified
Clara's utility function is U(X, Y) (X 2) (Y 1) .If Clara's marginal rate of substitution is 5 and she is consuming 15 units of good X, how many units of good Y is she consuming?
A) 5
B) 85
C) 20
D) 84
E) 11
Utility Function
A mathematical representation of how a consumer ranks different bundles of goods according to the levels of satisfaction they provide.
Marginal Rate of Substitution
The rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility.
Good X
A placeholder term that can refer to any commodity or product under consideration in an economic model or context.
- Ascertain and perform calculations concerning the marginal rate of substitution (MRS) to appreciate its impact on consuming behaviors.
Verified Answer
BA
Learning Objectives
- Ascertain and perform calculations concerning the marginal rate of substitution (MRS) to appreciate its impact on consuming behaviors.