Suppose that a consumer has utility function $\mathrm { U } = \mathrm { Ax } 2 \mathrm { y } 2$ with $\mathrm { MUx } = 2 \mathrm { Ay } 2 \mathrm { x }$ and $\mathrm { MUy } = 2 \mathrm { Ax } 2 \mathrm { y }$. 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.

Suppose That a Consumer Has Utility Function U=Ax2y2\mathrm { U } = \mathrm { Ax } 2 \mathrm { y } 2U=Ax2y2

Suppose That a Consumer Has Utility Function $\mathrm { U } = \mathrm { Ax } 2 \mathrm { y } 2$