Let be following table of marginal utility data that you have been able to calculate for two goods that your company sells, at rate: Quantity X1 Marginal Utility X1 Quantity X2 Marginal Utility X2 1 600 1 140 2 580 2 130 3 560 3 120 4 540 4 100 5 520 5 80 6
Let be following table of
| Quantity X1 | Marginal Utility X1 | Quantity X2 | Marginal Utility X2 |
| 1 | 600 | 1 | 140 |
| 2 | 580 | 2 | 130 |
| 3 | 560 | 3 | 120 |
| 4 | 540 | 4 | 100 |
| 5 | 520 | 5 | 80 |
| 6 | 500 | 6 | 60 |
Suppose that a government campaign has been initiated and negatively affects good X1, such that marginal utility of good X1 is estimated to decrease by 40 for each unit of this good.
Given above, if prices of goods are p1= 20, p2= 5 and Total Revenue is 115, then:
(a) What quantities of goods allow consumer to achieve maximum utility? Graph
b) If, to compensate for negative campaign, company carries out a more aggressive advertising with good X2 such that, marginal utility of each good improves by 20 for each unit; and also company gives a voucher for $5 to each consumer, then, what would be quantities of X1 and X2 that maximizes consumer's utility? Graph
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2 issues:
1. I need to understand equation Total Utility(x) = MU(x) + TU (x - 1). explain please. Thanks you
2. According to question b) ...the company gives a voucher of 5 dollars to each consumer...., how is this explained in the answer given by you? Please confirm. Thank you
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