Question

Suppose an individual has a utility function given by, \(U(x,y)=2x+3y\). We can say that this function displays:

• A. Diminishing marginal rate of substitution
• B. Increasing marginal rate of substitution
• C. Constant marginal rate of substitution
• D. Zero marginal rate of substitution

Hint:

Consider linear utility functions.

Answer 1

The Correct Option is C

The marginal rate of substitution (MRS) is the rate at which an individual is willing to trade one good for another while keeping utility constant. For a linear utility function such as \(U(x,y)=2x+3y\), the MRS is constant because the trade-off between the goods remains the same.
Therefore, the correct answer is (c).