
Calculus Calculus Math Forum 
 LinkBack  Thread Tools  Display Modes 
July 8th, 2012, 08:03 PM  #1 
Newbie Joined: Jul 2012 Posts: 14 Thanks: 0  Question on Derivative (Consumer Theory)
Hello everyone, I am currently doing some consumer theory and one of the questions basically asks to verify Diminishing Marginal Utility. Here it is : For (a)(d), which of the utility functions exhibit diminishing marginal utility for good X? I understand what the question is asking for and intuition behind the answer, however for this equation: U = (x^.6)(y^.4) how is the marginal utility of X = ¶MUx/¶x = (0.24x^(1.4))(y^(0.4)) I've been taking partial derivatives of the CobbDouglas equations in order to find MUx and MUy in order to solve these problems, however when I take the partial derivative for this I get : MUx = .6x^(.4)y^(.4). I haven't taken calculus for a while so it may be that I am over looking something obvious. I don't know what is being done in order to obtain the answer above. I tried product rule, but then I end up wit an awkward Y term and since it's in respect to X , it just ends up floating about. Anything help would be greatly appreciated. Thank you all! 
July 8th, 2012, 08:19 PM  #2 
Senior Member Joined: Jul 2010 From: St. Augustine, FL., U.S.A.'s oldest city Posts: 12,211 Thanks: 522 Math Focus: Calculus/ODEs  Re: Question on Derivative (Consumer Theory)
You want to take the second partial with respect to x, as diminishing marginal utility is taken to correspond to this. Given: 
July 8th, 2012, 08:32 PM  #3 
Newbie Joined: Jul 2012 Posts: 14 Thanks: 0  Re: Question on Derivative (Consumer Theory)
It seems I don't understand the intuition If you take the first derivate , you are able to deduce how much more utility is gained per each unit of x correct? By taking the 2nd derivative , we are able to see deduce what? I am confused as to why the 2nd derivative is necessary. Evidently your answer is correct, however I thought that the first derivate allowed us to see DMU by observing whether MUx increased when X increased or if it decrease when X increased. If you could please elaborate, I would greatly appreciate it. Thank you. 
July 8th, 2012, 08:38 PM  #4 
Senior Member Joined: Jul 2010 From: St. Augustine, FL., U.S.A.'s oldest city Posts: 12,211 Thanks: 522 Math Focus: Calculus/ODEs  Re: Question on Derivative (Consumer Theory)
I'm sorry, economics is not a subject with which I am very familiar (I only took macro and micro two decades ago and those courses used no calculus). I simply googled "diminishing marginal utility" and found this is how it is defined. Here is the article I used: http://en.wikipedia.org/wiki/Margina...rginal_utility Look under "Quantified marginal utility." 
July 8th, 2012, 08:43 PM  #5 
Newbie Joined: Jul 2012 Posts: 14 Thanks: 0  Re: Question on Derivative (Consumer Theory)
I will definitely look into it. I really appreciate your help. Thank you! 
July 8th, 2012, 08:47 PM  #6  
Newbie Joined: Jul 2012 Posts: 14 Thanks: 0  Re: Question on Derivative (Consumer Theory) Quote:
 
July 8th, 2012, 08:54 PM  #7 
Senior Member Joined: Jul 2010 From: St. Augustine, FL., U.S.A.'s oldest city Posts: 12,211 Thanks: 522 Math Focus: Calculus/ODEs  Re: Question on Derivative (Consumer Theory)
Glad to help, and welcome to the forum! 

Tags 
consumer, derivative, question, theory 
Search tags for this page 
Click on a term to search for related topics.

Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
Consumer's surplus  helloprajna  Economics  0  January 16th, 2014 10:49 PM 
consumer/ supply surplus!  hamburgertime  Calculus  0  December 13th, 2013 04:17 PM 
Producer/Consumer Surplus  Lucida  Calculus  2  May 30th, 2013 10:10 PM 
Consumer and Producer Surplus  BrianMX34  Calculus  2  December 11th, 2012 05:34 PM 
help with consumer arithmetic project  mujuru  Algebra  2  May 12th, 2010 06:01 PM 