Evaluating Claims about Marginal Utility
Consider two individuals with different preferences for consumption (c) and free time (t). Individual A's satisfaction is described by the utility function U_A(c, t) = 2c + 5t. Individual B's satisfaction is described by U_B(c, t) = 2c * t^5. A fellow student makes the following claim: 'For both individuals, the additional satisfaction gained from one more unit of consumption is constant and does not depend on the amount of free time they have.' Evaluate this claim. Is it correct for Individual A, Individual B, both, or neither? Justify your conclusion by calculating and interpreting the mathematical expression for the marginal utility of consumption for each individual.
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The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
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