Question
In: Economics
Assume that the prices of L and M are $6 and $2, respectively,
Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $6 and $2, respectively, and that the consumer's income is $22 Units of L Total Utility Units of M Total Utility 1 9 1 16 2 15 2 28 3 18 3 36 4 20 4 40 5 21 5 42 How many units of the two products will the rational consumer purchase?
Solutions
Expert Solution
2 units of L and 5 units of M
reason: The table with MU and MU/$ of the two commodities is given below:
We see that MU/$ of L = MU/$ of M = 1. So, the rational consumer
will purchase 2 units of L and 5 units of M.
Dollars spent:
2 units of L = 2 * 6 = 12
5 units of M = 5 * 2 = 10
Total amount spent = $22
Rahul Sunny answered 2 years agoRelated Solutions
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