Please provide a detailed step by step solution for the following problem:
Find the marginal rate of substitution for the following utility function:
U=10+In X1+0.8In X2
Please Word document attached.© BrainMass Inc. brainmass.com October 24, 2018, 11:04 pm ad1c9bdddf
The solution answers the question below. The marginal rate of substitution is examined.
Marginal Rate of Substitution
I am a graduate student surviving on a limited income and my money income is $300 per month, the price of good X is $4, and the price of good Y is also $4. Given these prices and income, I buy 50 units of X and 25 units of Y. The combination of X and Y bundle J. At bundle J my marginal rate of substitution (MRS) is 2. At bundle J, if I increase consumption of Y by 1 unit, how many units of X can I give up and still reach the same level of utility?View Full Posting Details