Suppose that U = U(P, M), where P and M are peanuts and marshmallows. The marginal utility of marshmallows, MU_M, is given by: A) P + M. B) P/M. C) $\Delta$U(P, M)/$\Delta$M. D) $\Delta$U(P, M) × $\Delta$M.

Question

Quizplus · Accepted Answer

The marginal utility of marshmallows is the partial derivative of the utility function with respect to M. Therefore, MU_M = ∂U/∂M. Using the chain rule, we get MU_M = (∂U/∂P) × (∂P/∂M) + (∂U/∂M) = F1F1F1S1F1F1F10U(P, M)/F1F1F1S1F1F1F10M. Therefore, the correct answer is C.

Suppose That U = U(P, M), Where P and M Δ\DeltaΔ

Suppose That U = U(P, M), Where P and M $\Delta$