Calculating the Marginal Rate of Substitution

Axioms of Consumer Preference

Utility Function

An individual's level of satisfaction from consuming two goods, apples (A) and bananas (B), can be described by the function U(A, B) = A * B. If this individual is currently consuming a bundle of 6 apples and 4 bananas, which of the following bundles would provide them with the exact same level of satisfaction?

Inferring Preference Structure

Match each mathematical concept used to model consumer choice with its correct description.

An economist observes that a consumer's indifference curves for goods X and Y are straight lines with a constant negative slope. What can be inferred about the consumer's perception of these two goods?

A consumer's preferences for two goods, X and Y, are represented by the utility function U(X, Y) = X * Y. Which of the following utility functions would represent the exact same preference ordering for this consumer, meaning that for any two bundles of goods, the preferred bundle would be the same under both functions?

Inferring the Marginal Rate of Substitution from Revealed Preferences

A consumer's preferences for two goods, X and Y, are represented by the utility function U(X, Y) = X^(1/2) * Y^(1/2). Consider a situation where this consumer adjusts their consumption bundle by increasing the amount of good X while remaining on the same indifference curve. What happens to the quantity of good Y they are willing to trade for one additional unit of good X?

A consumer's preferences for two goods, left shoes (L) and right shoes (R), are represented by the utility function U(L, R) = min(L, R). This mathematical representation implies that the consumer's willingness to trade right shoes for an additional left shoe diminishes as they acquire more left shoes relative to right shoes.

Analyzing Non-Standard Preferences