Consider the utility function u(C1,C2) = C1^0.3 C2^0.8 (a) Sketch

Consider the utility function u(C1,C2) = C1^0.3 C2^0.8 (a) Sketch

Consider the utility function u(C1,C2) = C1^0.3 C2^0.8(a) Sketch the indifference curve for this utility function at the utility level U = 5. (2 points)(b) Determine the marginal utility of both goods. (2 points)(c) Determine the marginal rate of substitution (MRS) of good 1 for good 2. (2 points)(d) What happens to the MRS as consumption of good 1 increases? Provide an intuitive explanation for your answer. (2 points)

 

 

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