Lecture5 - Lecture 5 Calculating marginal utility Utility...

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Unformatted text preview: Lecture 5 Calculating marginal utility Utility functions and indifference curves Examples of MRS, MU Intro to demand curves Quick Note on Partial Derivatives Suppose U(X,Y) = KX, where K is a constant. = ?? = Let U(X) = AXY = AYX = (AY)X = derivative of U holding everything but X constant, i.e., as if AY were constant. Or: let (AY) be equivalent to K in the first example. = (AY) Let U(X,Y) = AXY = (AX)Y = ??? = AX Marginal Utility We will be concerned with two classes of utility function: U(X, Y) = XY (or 10XY, .5XY, etc.: AXY, A is constant) U(X, Y) = X + Y (or 5X + 2Y, etc: aX + bY, a and b constant Marginal utility = partial derivatives: U(X,Y) = AXY: = ; = U(X,Y)=aX+bY; = ; = b Utility functions and indifference...
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This note was uploaded on 01/17/2012 for the course ECON 100A taught by Professor Safarzadeh during the Fall '09 term at UC Irvine.

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Lecture5 - Lecture 5 Calculating marginal utility Utility...

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