Suppose That a Consumer's Utility Function Can Be Written U(X,Y)

question 117

Essay

Suppose that a consumer's utility function can be written U(X,Y) = XY².
a. Use calculus to determine whether this consumer's marginal rate of substitution MRS_XY is increasing or decreasing in X.
b. Is this consumer's marginal rate of substitution MRS_XY increasing or decreasing in Y?

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Definitions:

Maturity

In finance, maturity is the time at which the principal amount of a bond, loan, or other debt instrument becomes due and payable.

Annualized Yield

The yearly return on an investment, expressed as a percentage, accounting for compounding interest.

Maturity

The specified time in the future when the principal amount of a financial instrument, such as a bond, becomes due and is repaid to the investor.