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Suppose Joe's utility for lobster (L) and soda (S) can be represented as U = L0.5...

  1. Suppose Joe's utility for lobster (L) and soda (S) can be represented as U = L0.5 S0.5. Draw the indifference curve that yields a utility level of 9. Calculate the MUL, MUS, and MRS of L for S on that indifference curve when S = 3.
  1. Teddy has preferences given by the utility function U(K,L) = 2L + K where K = pounds of Kale per month and L = pounds of lettuce per month. What is Teddy's Marginal Utility of Kale? What is Teddy's Marginal Utility from Lettuce? If Kale is on the horizontal axis, what is Teddy's marginal Rate of Substitution?
  2. Compute the MRS for the following utility functions:
    1. U(X,Y) = aln(X) + bln(Y),
    2. U(X,Y)=XaYb, and
    3. U(X,Y)=aX + bY, where a and b are strictly positive constants.
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