Suppose that a consumer has utility function U= Ax²y²with MU_x = 2Ay²x and MU_y = 2Ax²y. Which of the following statements is false? A) The marginal utilities are positive. B) The marginal rate of substitution is diminishing. C) The indifference curves are bowed away from the origin. D) The indifference curves are downwards sloping.

Question

Quizplus · Accepted Answer

The indifference curves for this utility function are actually bowed towards the origin, not away from it, due to the diminishing marginal rate of substitution.

Suppose That a Consumer Has Utility Function U= Ax2y2 with

Suppose That a Consumer Has Utility Function U= Ax²y²with