From the information given above calculate the price of Y.Given the information above, calculate how many X this consumer could purchase if all $1,000 were spent on X.Calculate the price of X.Suppose the price of X decreases to 2, what would be the marginal rate of substitution at the new optimal point? 2. Consider a consumer that is choosing between good X and good Y. The total income this personhas to spend on X and Y is 1,000. The marginal utility of Y at point A is 40 and the marginal utilityof X at point A is 20. Consider the following graph:Y10020U₁X

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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From the information given above calculate the price of Y.
Given the information above, calculate how many X this consumer could purchase if all $1,000 were spent on X.
Calculate the price of X.
Suppose the price of X decreases to 2, what would be the marginal rate of substitution at the new optimal point?

2. Consider a consumer that is choosing between good X and good Y. The total income this person
has to spend on X and Y is 1,000. The marginal utility of Y at point A is 40 and the marginal utility
of X at point A is 20. Consider the following graph:
Y
100
20
U₁
X

Expert Solution

Step 1: State the given information:

Consumer has options of two goods; X and Y.

This consumer has total income of $1000 to spend on X and Y.

Marginal utility of X and marginal utility of Y are 20 and 40 respectively at current consumption point.

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