Given the utility function U(x₁,x₂)= x₁+ 2x₂, the marginal rate of substitution (MRS)is: A)equal to 1/2. B)undefined. C)equal to 2. D)zero.

Question

Quizplus · Accepted Answer

The formula for MRS is the ratio of the marginal utilities of the two goods. In this case, it is MRS = MUx₁ / MUx₂. Taking the partial derivative of the utility function with respect to x₁ gives MUx₁ = , and taking the partial derivative with respect to x₂ gives MUx₂ = 2. Therefore, MRS = () / 2. Since we have no information about _or, the MRS is undefined. However, if we assume that _and are equal, then MRS would be equal to () / 2 = 1/2. Therefore, the best choice is A.

Given the Utility Function U(x1,x2)= X1 + 2x2, the Marginal

Given the Utility Function U(x₁,x₂)= X₁+ 2x₂, the Marginal