question archive John's preferences are represented by Cobb-Douglas utility function U = qira -“ with a = 0
John's preferences are represented by Cobb-Douglas utility function U = qira -“ with a = 0
Subject:EconomicsPrice: Bought3
John's preferences are represented by Cobb-Douglas utility function U = qira -“ with a = 0.8. Answer the following questions. (a) Show that the given utility function exhibits the law of diminishing marginal utility. (b) What is the trade-off between the two goods John is willing take when he is currently consuming 5 of good 1 and 2 of good 2. In other words, find John's MRS at the bundle (5,2). (c) What about MRS at the bundle (2,4)? (d) Visualize your answers in parts (b) and (c) in one same diagram.
