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Math Help - Suppose a consumer's utility function is U(x,y) = 4xy

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    Suppose a consumer's utility function is U(x,y) = 4xy

    a) Partially differentiate the utility function to find expressions for the marginal utility of x and y.
    b) What is the marginal rate of substitution when x = 2 and y = 16
    c) The consumer has a budget of $96 to spend. The price of x is $12 and the price of y is $6. Write the equation for the budget constraint.
    d) What is the slope of the budget line, dy/dx?
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    Quote Originally Posted by brumby_3 View Post
    a) Partially differentiate the utility function to find expressions for the marginal utility of x and y.
    To find a partial derivative, differentiate with respect to the variable required and hold all other variables constant.

    \frac{\partial U}{\partial x} = 4y

    Have a go at finding \frac{\partial U}{\partial y}
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    Hi Pickslides,
    The answer I got is 4x.
    I've actually figured out how to do the remaining questions, but now I have some extension questions I could use some help with.

    e) Set up the Lagrangian function.
    f) Partially differentiate the Lagrangian function with respect to first x, then y and λ. Set each of the partial differentials you obtain equal to zero.
    g) Solve the three simultaneous equations you got in f) to find the consumer's optimal bundle of x and y, and to find the marginal utility of an extra dollar of income, λ.
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