Consider the Utility Function

question 12

Essay

Consider the utility function .(Explain all your answers.)
a.Derive the function for the marginal rate of substitution.
b.Do the tastes represented by this utility function satisfy diminishing MRS?
c.The marginal utility of a good is defined as the change in utility from additional consumption of that good (holding all else constant).Derive the marginal utility of and .
d.Why does an ordinal approach to utility theory not any attention to what you derived in (c)?
e.Why does an ordinal approach to utility not treat the marginal rate of substitution the way it treats the marginal utility concept?

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Definitions:

Labour Rate Variance

A financial metric that measures the difference between the actual cost of labor and its expected cost based on standard rates.

Performance Report

A detailed report comparing budgeted data to actual data.

Budgeted Costs

Estimated financial figures for revenues and expenses set during the budgeting process for a future period.

Labour Efficiency Variance

A measure used in cost accounting to determine the difference between the actual hours worked and the standard hours planned for a task, multiplied by the standard labor rate.