For the following utility function, find the marginal utility with respect to good 1 and good 2...
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For the following utility function, find the marginal utility with respect to good 1 and good 2 and the marginal rate of substitution.
{eq}3x_1^2 x_2^5 {/eq}
Marginal Rate of Substitution
The marginal rate of substitution is the ratio of the change in consumption or the marginal utilities of the consumer that he/she acquires after consuming two goods. The substitution rate shows how a consumer substitutes one consumption unit for another consumption good. The indifference curve slope represents the marginal rate of substitution.
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View this answerGiven the utility function
{eq}U = 3{x_1}^2{x_2}^5 {/eq}
The marginal utility with respect to good 1
{eq}M{U_{{x_1}}} =\dfrac{\partial U}{\partial...
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Marginal Rate of Substitution: Definition, Formula & Example
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Chapter 3 / Lesson 51
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