Hui's utility function is U(x,y) = 1.6x+y2. As usual, let MRS=Ux / Uy be Hui's marginal...

Hui's utility function is U(x,y) = 1.6x+y². As usual, let MRS=Ux / Uy be Hui's marginal rate of substitution. What is the value of the derivative dMRS/dx at the point were x=4.9 and y=7.7?

Expert Solution

We know that the marginal utility for x is calculated by partially differentiating utility w.r.t x while holding y as constant as:

Similarly, the marginal utility for y is calculated by partially differentiating utility w.r.t y while holding x as constant as:

Now, we know that marginal rate of substitution(MRS) is calculated as:

Substituting the calculated values, we get:

So, we see that the marginal rate of substitution for Hui is a function of y.

Because of this :

Ans. 0

Rahul Sunny answered 3 years ago

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