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Consider the following utility functions:
a. U(x,y)=xy
b. U(x,y)=x^2y^2
c. U(x,y)= lnx+lny
Show that each of these has a diminishing MRS but that they exhibit constant, increasing, and decreasing marginal utility, respectively. What do you conclude?
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assignment is to be a minimum of five pages long and in APA format. A good variety of objective, high quality, present sources need to be used.
If you have an asset that costs $20 in year zero and face a MARR of 1%, what is the smallest benefit you could receive in period 5 and still find the investment acceptable?
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How does this change the value generated by the market? Why do you say this? Where does this appear in your graph.
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