Marginal Utility-Budget

I’m studying for my Economics class and need an explanation.

Marginal Utility-Budget

You are consuming 2 goods: good A and good B

The price of good A=$1 and the Price of good B = $2

Your budget is $10

Using the appropriate information answer the questions below

Number of units MUa MU B

First 10 24

Second 8 20

Third 7 18

Fourth 6 16

Fifth 5 12

Sixth 4 6

Seventh 3 4

  • How many units of A and B should you purchase?_________________
  • What is the maximum TU (total utility) can you get from your budget of $10_________________________
  • If you were to trade the last unit of B (at $2 per unit) for 2 units of A (at $1 per unit), how large would your TU be?__________________
  • If your income is raised to $14, how many units of A and of B should you consume?_________________________
  • What will be your TU from the $14 income?_____________________
  • If you were to trade the last unit of B (at income of $14) for 2 units of A instead, what would be your TU?_________________________

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Assignment Solutions


Assignment Solutions

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