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Total differential, level curve. (please check work)

  1. Apr 6, 2014 #1

    939

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    1. The problem statement, all variables and given/known data

    For u(x1, x2) = ax1 + bx2

    a) find total differential
    b) Draw a representative level curve for u = ubar (u with a line over it)
    c) Find MRS (marginal rate of substitution)


    2. Relevant equations

    u(x1, x2) = ax1 + bx2


    3. The attempt at a solution
    a)
    fx1 = a
    fx2 = b
    du = fx1dx1 + fx2dx2
    du = adx1 + bdx2

    b) Без імені.jpg

    c) adx1 + bdx2 = 0
    bdx2 = -adx1
    -(dx2/dx1) = a/b

    ∴ MRS = a/b
     
  2. jcsd
  3. Apr 6, 2014 #2

    BruceW

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    Homework Helper

    I don't know economics. But mathematically, your answers look good to me. (I looked up the definition for marginal rate of substitution, and that suggests you have the right answer).
     
  4. Apr 6, 2014 #3

    939

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    Yes, I should've added something about that. Thanks :-).
     
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