Assume that an individuals preferences is represented

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Assume that an individual’s preferences is represented by the following utility function: U(X,Y) = (X^α)(Y)

a. What could you tell about the type of x and y? (“good” , “bad” or a “neuter”)

b. Derive the equation for his/her indifference curve for utility level of 100?

c. Derive marginal utility of x and marginal utility of y as a function of x,y and α.

d. Does goods x and y exhibit diminishing marginal utility, constant marginal utility, or increasing marginal utility?

e. Are good x and y perfect substitutes or imperfect substitutes?

Reference no: EM13996209

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