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In: Economics

Ahmad choosing between two goods, X and Y, and your marginal utility from each is as...

Ahmad choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $12and the prices of X = $2 and price of Y is $2.

Unit of product

Good X

Good Y

Marginal utility

Marginal utility per dollar

Marginal utility

Marginal utility per dollar

1

20

16

2

16

14

3

12

12

4

8

10

5

6

8

6

4

6
  1. What quantities of X and Y should be purchased to maximize utility?

  2. What total utility will the consumer realize at these quantities founded in part 1?

  3. Assume that, other things remaining unchanged, the price of Y falls to $1. What quantities of X and Y will you now purchase to maximize utility?

  4. Using the two prices and quantities for good Y, derive a demand schedule for good

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Expert Solution

Rahul Sunny answered 7 months ago
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