Suppose the consumer's utility function is given by U(x,y) = xy + y where MU_x = y MU_y = x+1
The equation for this consumer's demand curve for y when I < P_x is

Question

Quizplus · Accepted Answer

To derive the demand curve for y, we need to use the marginal rate of substitution (MRS) between x and y, which is given as MU_x / MU_y. From the given conditions, we have MU_x / MU_y = y / (x+1) = MRS. Setting this equal to the price ratio (P_y / P_x), we get the optimal demand for y: y^d = MRS * P_x / P_y Substituting the given values of MRS and the prices, we get: y^d = (y / (x+1)) * (1/2) Solving for y, we get: y^d = 2y / (2x+1) Simplifying, we get: y^d = 11ea71e2_6310_4756_89cd_810f405a01a0_TB1644_11.

Suppose the Consumer's Utility Function Is Given by U(x,y) =