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B- In the previously selected combination of goods ( item A), draw-up the budget line (oranges on the y-ax and grapes on the x-axis) and the indifference curve Does the equation of utility maximization hold in th

B- In the previously selected combination of goods ( item A), draw-up the budget line (oranges on the y-ax and grapes on the x-axis) and the indifference curve Does the equation of utility maximization hold in th

Micro Economics For Today
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 5SQP
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Having only (42) SR in your pocket, how many Kgs of each good should you purchase to maximize utility? B- In the previously selected combination of goods (in item A), draw-up the budget line (oranges on the y-axis and grapes on the x-axis) and the indifference curve? Does the equation of utility maximization hold in this case? Explain?
Transcribed Image Text:Having only (42) SR in your pocket, how many Kgs of each good should you purchase to maximize utility? B- In the previously selected combination of goods (in item A), draw-up the budget line (oranges on the y-axis and grapes on the x-axis) and the indifference curve? Does the equation of utility maximization hold in this case? Explain?
Question #2 Assume you went to the supermarket with (42) SR in your pocket to be spent on fruits. You find the price tag as (7) SR per Kg for oranges and (21) SR per Kg. for white grapes. The marginal utility (assumed measurable) of each good is independent of the rate of consumption of other good. The marginal utility schedule is as follows: Marginal Utility Schedule Units of good Marginal Utility of MUo/Po Marginal Utility of White grapes Oranges 60 55 48 40 30 24 1 2 3 4 5 6 24 22 20 18 16 14 3.43 3.14 2.86 2.57 2.29 2.00 MUg/Pg 2.86 2.62 2.29 1.90 1.43 1.14
Transcribed Image Text:Question #2 Assume you went to the supermarket with (42) SR in your pocket to be spent on fruits. You find the price tag as (7) SR per Kg for oranges and (21) SR per Kg. for white grapes. The marginal utility (assumed measurable) of each good is independent of the rate of consumption of other good. The marginal utility schedule is as follows: Marginal Utility Schedule Units of good Marginal Utility of MUo/Po Marginal Utility of White grapes Oranges 60 55 48 40 30 24 1 2 3 4 5 6 24 22 20 18 16 14 3.43 3.14 2.86 2.57 2.29 2.00 MUg/Pg 2.86 2.62 2.29 1.90 1.43 1.14
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