You are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? ______units of X and ______units of Y b. What total utility will you realize? ______utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? _____units of X and ______units of Y
You are choosing between two goods, X and Y, and your
| Units of X | MUx | Units of Y | MUy |
|---|---|---|---|
| 1 | 10 | 1 | 8 |
| 2 | 8 | 2 | 7 |
| 3 | 6 | 3 | 6 |
| 4 | 4 | 4 | 5 |
| 5 | 3 | 5 | 4 |
| 6 | 2 | 6 | 3 |
a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility?
______units of X and ______units of Y
b. What total utility will you realize?
______utils
c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase?
_____units of X and ______units of Y
d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X.
Instructions: Start with the highest price first
| Price of X | Quantity Demanded of X |
|---|---|
| $ | |
| $ |
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