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Dividing MUX and MUY by their respective prices compute the weighted marginal utility or marginal utility of money expenditure and draw up Table 2 showing diminishing returns for the consumption of the 6 units? (b) Briefly state what you can infer on this equation; MUX/PX = MUY/PY as far as equi marginal principle and managerial economics is concerned? C)Given that MUX/PX and MUY/PY are equal to 6 when 5 units of X and 3 units of Y are purchased. By purchasing these combinations of X and Y, calculate the amount the consumer will spend and derive the maximum satisfaction from combination of these units

Dividing MUX and MUY by their respective prices compute the weighted marginal utility or marginal utility of money expenditure and draw up Table 2 showing diminishing returns for the consumption of the 6 units? (b) Briefly state what you can infer on this equation; MUX/PX = MUY/PY as far as equi marginal principle and managerial economics is concerned? C)Given that MUX/PX and MUY/PY are equal to 6 when 5 units of X and 3 units of Y are purchased. By purchasing these combinations of X and Y, calculate the amount the consumer will spend and derive the maximum satisfaction from combination of these units

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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(a) Dividing MUX and MUY by their respective prices compute the weighted marginal utility or marginal utility of money expenditure and draw up Table 2 showing diminishing returns for the consumption of the 6 units? (b) Briefly state what you can infer on this equation; MUX/PX = MUY/PY as far as equi marginal principle and managerial economics is concerned? C)Given that MUX/PX and MUY/PY are equal to 6 when 5 units of X and 3 units of Y are purchased. By purchasing these combinations of X and Y, calculate the amount the consumer will spend and derive the maximum satisfaction from combination of these units. (d) Applying the above principle illustrate in terms of a figure, and draw marginal utility curves for goods X and Y. You need to use marginal utility and price i.e. Marginal utility per Kwacha spent on good X = MUX/PX, and that of Y = MUY/PY. The MUX/PX curve should be shown in figure (a) while the MUY/PY curve should be shown in Fig (b). Please do not draw negative portion of the marginal utility curves.
QUESTION ONE The equi-marginal principle or the law of substitution is one of the most important principles of Managerial Economics and can be explained in terms of an arithmetical analysis. In Table 1, you have been shown marginal utility schedule of X and Y from the different units consumed by Mwape M. Let us also assume that prices of X and Y are given as ZMW 4 and ZMW 5, X and Y being mangoes and oranges. MUx and MUY schedules show diminishing marginal utilities for both goods X and Y from the different units consumed. Table 1: Marginal Utility Schedules Number of Units Consumed MUX MUY 1 40 55 36 50 3 32 30 4 28 20 5 24 15 20 5
Transcribed Image Text:QUESTION ONE The equi-marginal principle or the law of substitution is one of the most important principles of Managerial Economics and can be explained in terms of an arithmetical analysis. In Table 1, you have been shown marginal utility schedule of X and Y from the different units consumed by Mwape M. Let us also assume that prices of X and Y are given as ZMW 4 and ZMW 5, X and Y being mangoes and oranges. MUx and MUY schedules show diminishing marginal utilities for both goods X and Y from the different units consumed. Table 1: Marginal Utility Schedules Number of Units Consumed MUX MUY 1 40 55 36 50 3 32 30 4 28 20 5 24 15 20 5
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