**Marginal Utility Table and Budget Constraint Analysis**In this exercise, we will explore the concept of marginal utility and budget constraints through a tabulated example. Let's break down each part of the table and perform the necessary computations. Here's the given data and the tasks:### Table| (1) Quantity | (2) Product A MU | (3) Product A MU per $ (at $2) | (4) Product B MU ||--------------|------------------|-------------------------------|------------------|| 1 | | | || 2 | | | || 3 | | | || 4 | | | || 5 | | | || 6 | | | |### Tasksa) From the graph above, complete columns 2 and 4 of the table. Round your answers to whole numbers. b) If the price of both products is $1, what quantity of each good would Marshall purchase if his budget was $8?- Quantity of A: ____- Quantity of B: ____c) Suppose that the price of Product A increases to $2. Complete column 3 of the table above.d) If Marshall’s budget remained the same, what quantities of each good would he now purchase?- Quantity of A: ____- Quantity of B: ____#### Solutions and Explanation:1. **Understanding the Marginal Utility Table** - **Column (1):** Lists the quantity of each product. - **Column (2):** Marginal Utility (MU) of Product A. This column needs to be filled with the given data. - **Column (3):** Marginal Utility per dollar of Product A at $2. This is computed by dividing the MU of Product A by 2. - **Column (4):** Marginal Utility (MU) of Product B. This needs to be filled with the given data.2. **Completing Columns 2 and 4** Based on the information provided (not shown in the image), let's assume the following marginal utilities for Products A and B for quantities 1 to 6. - Product A MU: 10, 8, 6, 4, 3, 2 - Product B MU: 8, 7, 6 **Marginal Utility Analysis of Products**The graph given below indicates Marshall's marginal utility for two products, A and B.![Graph]**Detailed Graph Explanation:**- **Title**: The graph represents the marginal utility of two different products, A and B, as consumed by Marshall.- **Axes**: - The vertical axis (Y-axis) represents the Marginal Utility, ranging from 0 to 12. - The horizontal axis (X-axis) represents the Quantity per period, ranging from 0 to 10.- **Data Representation**: - Two lines are plotted to represent the marginal utility of Product A and Product B. - **Product A**: - Depicted by a red line. - Starts at a marginal utility of 12 at a quantity of 0 and declines steadily as the quantity increases. - **Product B**: - Depicted by a blue line. - Starts at a marginal utility of 8 at a quantity of 0 and declines more gradually compared to Product A.**Summary**:This graph is useful for visualizing the concept of diminishing marginal utility—the principle that as more of a product is consumed, the additional satisfaction (marginal utility) derived from consuming each additional unit decreases. In this case, Product A starts with a higher marginal utility than Product B but decreases more sharply.

Marginal utility refers to the additional satisfaction or value that a consumer derives from…

a) From the graph above, complete columns 2 and 4 of the table above. Round your answers to whole numbers. b) If the price of both products is $1, what quantity of each good would Marshall purchase if his budget was $8?

a) From the graph above, complete columns 2 and 4 of the table above. Round your answers to whole numbers. b) If the price of both products is $1, what quantity of each good would Marshall purchase if his budget was $8?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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