Question : A consumer's utility function is $U=X Y$. If the consumer is currently consuming $X=4$ and $Y=5$, what is the marginal rate of substitution (MRS) of $\mathrm{X}$ for $\mathrm{Y}$ ?
Option 1: 1/5
Option 2: 4/5
Option 3: 5/4
Option 4: 5/1
Correct Answer: 5/4
Solution : The correct answer is (c) $5 / 4$
To calculate the marginal rate of substitution (MRS) of $\mathrm{X}$ for $\mathrm{Y}$, we need to find the ratio of the marginal utilities of $\mathrm{X}$ and $\mathrm{Y}$.
The utility function is $\mathrm{U}=\mathrm{XY}$. To find the marginal utility of $\mathrm{X}$, we differentiate the utility function with respect to $\mathrm{X}$ : $ \partial \mathrm{U} / \partial \mathrm{X}=\mathrm{Y} $
To find the marginal utility of $\mathrm{Y}$, we differentiate the utility function with respect to $\mathrm{Y}$ : $ \partial \mathrm{U} / \partial \mathrm{Y}=\mathrm{X} $
Now we can calculate the MRS: $ \begin{aligned} \mathrm{MRS} & =(\partial \mathrm{U} / \partial \mathrm{X}) /(\partial \mathrm{U} / \partial \mathrm{Y}) \\ & =\mathrm{Y} / \mathrm{X} \\ & =5 / 4 \end{aligned} $
Question : A consumer's utility function is $U=X Y$. If the consumer is currently consuming $\mathrm{X}=4$ and $\mathrm{Y}=5$, what is the marginal rate of substitution (MRS) of $\mathrm{X}$ for $\mathrm{Y}$ ?
Question : A consumer's utility function is $U=X+2 Y$. If the consumer is currently consuming $\mathrm{X}=5$ and $\mathrm{Y}=3$, what is the marginal rate of substitution (MRS) of $\mathrm{X}$ for $\mathrm{Y}$ ?
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