Please explain very important 1. Marginal rate of substitution MRS (x1, x2) util

Question

Please explain very important

1. Marginal rate of substitution MRS (x1, x2) utility function min {3x1, x2} for file [x1, x2] = 9.18 would be:

a) 1/3

b) 2/3

c) 1.5

d) 3

e) is not defined at

2. A consumer’s preferences over wealth can be represented by the utility function u(w) = (w)0.5. His wealth will be 9 million in one state of the world and 25 million in another state of the world. If the probabilities of each state of the world equal 0.5, then the certainty equivalent is:
a) 12.5 million b) 9 million c) 16 million d) 17 million e) None of the above

Explanation / Answer

Ans (a) is not defined at

Ans (b) 9 million

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