Suppose for some utility function that $\mathrm { MUx } = 5 \mathrm { y } \text { and } \mathrm { MUy } = 7 \mathrm { x }$ . Which of the following is correct?
A)The assumption that more is better is satisfied for both goods.
B)This utility function will violate the assumption that preferences are complete.
C)The indifference curves for this utility function will be straight lines with a slope of -1.
D)The indifference curves will have a diminishing marginal rate of substitution.

Question

Quizplus · Accepted Answer

The given marginal utilities (MUx = 5y and MUy = 7x) imply that as the quantity of either good increases, so does the utility derived from each additional unit, satisfying the "more is better" assumption. The marginal utilities are positive and increase with the quantity of the other good, which aligns with the principle that more of a good is preferred to less, assuming other factors remain constant.

Suppose for Some Utility Function That MUx=5y and MUy=7x\mathrm { MUx } = 5 \mathrm { y } \text { and } \mathrm { MUy } = 7 \mathrm { x }MUx=5y and MUy=7x

Suppose for Some Utility Function That $\mathrm { MUx } = 5 \mathrm { y } \text { and } \mathrm { MUy } = 7 \mathrm { x }$