THE INFORMATION BELOW PROVIDES PRICE AND MARGINAL UTILITY DATA FOR EACH Of THE PRODUCTS SHOWN UNIT NUMBER 1 2 3 4 5 No. of units of this item GOOD A $10 EACH M.U. bought Marginal Utility of the last unit 50 40 28 14 -2 bought MU/P for the last unit bought Overall Total Utility GOOD B $8 EACH M.U. 40 35 30 25 20 Good A GOOD C $15 EACH M.U. 30 20 10 0 -10 Assume the consumer has $70 to spend, and assume that he/she wants to achieve maximum satisfaction (maximum utility) by purchasing the best possible set of good A through E. Assume all or nearly all of the $70 is to be spent. Determine the number of units of Good A which will be bought (if any), the number of units of Good B (if any), etc. Also calculate the total utility (overall) that will be achieved in the end, and fill in the other information asked for below. Good B Recall that the conditions: MUa/Pa = MUB/Pb = etc. will be satisfied (as nearly as possible) for maximum utility to be reached (where MUa is the marginal utility for the last unit of good "a" and Pa is the price of good "a". GOOD D $6 M.U. 25 21 18 10 3 Good C GOOD E $2 M.U. 15 10 6 3 0 Good D Good E

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
THE INFORMATION BELOW PROVIDES PRICE AND MARGINAL UTILITY DATA FOR EACH
Of THE PRODUCTS SHOWN
UNIT NUMBER
1
2
3
4
5
No. of units of
this item
GOOD
A
$10 EACH
M.U.
bought
Marginal
Utility of the
last unit
50
40
28
14
-2
bought
MU/P for the
last unit
bought
Overall Total Utility
GOOD
B
$8 EACH
M.U.
40
35
30
25
20
Good
A
GOOD
C
$15 EACH
M.U.
30
20
10
0
-10
Assume the consumer has $70 to spend, and assume that he/she wants to achieve maximum
satisfaction (maximum utility) by purchasing the best possible set of good A through E. Assume all or
nearly all of the $70 is to be spent.
Determine the number of units of Good A which will be bought (if any), the number of units of Good B
(if any), etc. Also calculate the total utility (overall) that will be achieved in the end, and fill in the other
information asked for below.
Good
B
Recall that the conditions: MUa/Pa = MUB/Pb = etc. will be satisfied (as nearly as possible) for
maximum utility to be reached (where MUa is the marginal utility for the last unit of good "a" and Pa is
the price of good "a".
GOOD
D
$6
M.U.
25
21
18
10
3
Good
C
GOOD
E
$2
M.U.
15
10
6
3
0
Good
D
Good
E
Transcribed Image Text:THE INFORMATION BELOW PROVIDES PRICE AND MARGINAL UTILITY DATA FOR EACH Of THE PRODUCTS SHOWN UNIT NUMBER 1 2 3 4 5 No. of units of this item GOOD A $10 EACH M.U. bought Marginal Utility of the last unit 50 40 28 14 -2 bought MU/P for the last unit bought Overall Total Utility GOOD B $8 EACH M.U. 40 35 30 25 20 Good A GOOD C $15 EACH M.U. 30 20 10 0 -10 Assume the consumer has $70 to spend, and assume that he/she wants to achieve maximum satisfaction (maximum utility) by purchasing the best possible set of good A through E. Assume all or nearly all of the $70 is to be spent. Determine the number of units of Good A which will be bought (if any), the number of units of Good B (if any), etc. Also calculate the total utility (overall) that will be achieved in the end, and fill in the other information asked for below. Good B Recall that the conditions: MUa/Pa = MUB/Pb = etc. will be satisfied (as nearly as possible) for maximum utility to be reached (where MUa is the marginal utility for the last unit of good "a" and Pa is the price of good "a". GOOD D $6 M.U. 25 21 18 10 3 Good C GOOD E $2 M.U. 15 10 6 3 0 Good D Good E
Expert Solution
steps

Step by step

Solved in 3 steps with 3 images

Blurred answer
Knowledge Booster
Personal Budget
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education