Let the following table represents the total utility of a given consumer, in the cardinal utility approach. Q 1 2 3 4 5 6 7 TUX 8 14 18 20 20 18 16 TUY 6 10 13 15 16 16 14 MUX MUY MUX/PX MUY/PY Calculate the MUX and MUY and fill the table in the 4th and 5th rows. If the two products (X&Y) are free goods how many of X and Y should the consumer take to maximize utility? What is the maximum utility of X and Y if they are free
Let the following table represents the total utility of a given consumer, in the cardinal utility approach. Q 1 2 3 4 5 6 7 TUX 8 14 18 20 20 18 16 TUY 6 10 13 15 16 16 14 MUX MUY MUX/PX MUY/PY Calculate the MUX and MUY and fill the table in the 4th and 5th rows. If the two products (X&Y) are free goods how many of X and Y should the consumer take to maximize utility? What is the maximum utility of X and Y if they are free
Chapter21: Demand: Consumer Choic
Section: Chapter Questions
Problem 1E
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Question
Let the following table represents the total utility of a given consumer, in the cardinal utility approach.
Q
1
2
3
4
5
6
7
TUX
8
14
18
20
20
18
16
TUY
6
10
13
15
16
16
14
MUX
MUY
MUX/PX
MUY/PY
Calculate the MUX and MUY and fill the table in the 4th and 5th rows.
If the two products (X&Y) are free goods how many of X and Y should the consumer take to maximize utility?
What is the maximum utility of X and Y if they are free?
Let now price of X is 4 birr per unit and price of Y is 2 birr per unit. Calculate MUX/PX and MUY/PY and fill the 6th and 7th row.
Assuming the consumer has any amount of money (enough budget) how many of X and Y should the consumer buy, to maximize utility?
What is the total utility of X and Y?
Let now price of X is 4 birr per unit and price of Y is 2 birr per unit and budget of the consumer for consumption of X and Y is 20 birr. Given budget constraint how many of X and Y should the consumer buy to maximize utility?
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