(See Solution) A consumer's preferences are given by the utility function: u(x, y)=x^1 / 2 y^1 / 2 Suppose the consumer owns a bundle (x, y)=(12,30). Label


Question: A consumer's preferences are given by the utility function:

\[u(x, y)=x^{1 / 2} y^{1 / 2}\]
  1. Suppose the consumer owns a bundle \((x, y)=(12,30)\). Label this bundle "A" on the graph below and use red shading to indicate all the bundles that the consumer like at least as much as A (e.g. weakly prefer to A).
  2. Suppose the consumer owns a bundle \((x, y)=(8,25)\). Label this bundle "B" on the graph below and use black shading to indicate all the bundles that the consumer does not like at least as much as \(\mathrm{B}\) (e.g. \(\mathrm{B}\) is weakly prefer to these bundles).
  3. Calculate and show your derivations below for the marginal utility of \(X\) and of \(Y\) for the given utility function.

\(M U_{X}=\)

\(M U_{Y}=\)

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Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document

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