Given the utility function U(x₁,x₂)= min(x₁,x₂), the marginal rate of substitution when x₁equals X₂is: A)undefined. B)zero. C)infinite. D)one.

Question

Quizplus · Accepted Answer

The utility function U(x1, x2) = min(x1, x2) represents perfect complements, where the consumer wants to consume x1 and x2 in fixed proportions. At the point where x1 = x2, the indifference curve has a kink, and the marginal rate of substitution (MRS) is undefined because the slope of the indifference curve does not exist at that point.

Given the Utility Function U(x1,x2)= Min(x1,x2), the Marginal Rate of Substitution

Given the Utility Function U(x₁,x₂)= Min(x₁,x₂), the Marginal Rate of Substitution