Question

In: Economics

Consider the following five utility functions. G(x,y) = (x)1/2 + y H(x,y) = (x+1)1/2 + y...

Consider the following five utility functions.

G(x,y) = (x)^1/2 + y

H(x,y) = (x+1)^1/2 + y + 1

L(x,y) = ln(x) + y

U(x,y) = x e^y

W(x,y) = 100 x - 4x² + 3 y

Z(x,y) = -(100 - x)² -3 (y-200)²

Which function or functions represent the same preferences as U?

a.G

b.U

c.None.

d.W

e.Z

f.L

g.H

Expert Solution

If the Marginal Rate of Substitution (MRS) of two utility functions are same, then they will exhibit same preferences...

In this question I have calculated the MRS of all the functions and then compare the MRS of all the utility functions with utility function U and I have observed that the MRS of utility function U and MRS of utility function L are same and also MRS of utility function U is same with itself.

Therefore functions U and L represent the same preferences as U...

So option b. and f. are correct...

Check images for complete answer...

Rahul Sunny answered 2 years ago

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