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


Related Solutions

If 2 L, 4 L and 6 L of three separate solutions of concentrations 1 M, 2 M and 3 M, respectively, are mixed together then what is the concentration of the resultant mixture?
If 2 L, 4 L and 6 L of three separate solutions of concentrations 1 M, 2 M and 3 M respectively, are mixed together then what is the concentration of the resultant mixture?
Assume an atom has K, L, and M electrons and the energies for K, L, and...
Assume an atom has K, L, and M electrons and the energies for K, L, and M shells are -5000, -500, and -50 eV. Please give all possible energies of Auger electrons and characteristic X-rays.
3. the production function is f(L, M)=4*(L^1/2) (M^1/2), where L is the number of units of...
3. the production function is f(L, M)=4*(L^1/2) (M^1/2), where L is the number of units of labor and M is the number of machines used. If the cost of labor is $49 per unit and the cost of machines is $25 per unit, then how much will be the total cost of producing 7 units of output ?
Six-month call options with strike prices of $35 and $40 cost $6 and $4, respectively. You...
Six-month call options with strike prices of $35 and $40 cost $6 and $4, respectively. You plan to create a bull spread call (Buying a call spread) by trading a total of 200 options? Total amount of credit or debit: ____________________ (Credit or Debit?) Maximum amount of profit or loss: _______$300*200_____________ (Profit or Loss?) Break-even stock price of this spread: ____________________ NB: show complete workings
Assume that a production function is given by y = AK^1/3 L^2/3. If A = 6 and L = 1, the depreciation rate is 0.15
Assume that a production function is given by y = AK^1/3 L^2/3. If A = 6 and L = 1, the depreciation rate is 0.15, and the savings rate is 0.4, the steady-state level of capital is?
Calculate how to make 0.5 L of 6 M HCl.
Calculate how to make 0.5 L of 6 M HCl.
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent...
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent 40 % of the dollar value of the​ portfolio, and asset M will account for the other 60 % . The projected returns over the next 6​ years, 2018 dash2023 ​, for each of these assets are summarized in the following​ table: LOADING... . a. Calculate the projected portfolio​ return, r overbar Subscript p ​, for each of the 6 years. b. Calculate the...
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent...
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent 39% of the dollar value of the​ portfolio, and asset M will account for the other 61%. The projected returns over the next 6​ years, 2018-2023, for each of these assets are summarized in the following​ table:     Projected Return   Year   Asset L   Asset M 2018   13%   21% 2019   13%   17% 2020   15%   17% 2021   17%   14% 2022   17%   12% 2023   18%   11% a....
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent...
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent 56 % of the dollar value of the​ portfolio, and asset M will account for the other 44 %. Assume that the portfolio is rebalanced at the end of each year. The expected returns over the next 6​ years, 2018dash2023​, for each of these assets are summarized in the following​ table: Projected Return Year Asset L Asset M 2018 14% 21% 2019 14% 17%...
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent...
Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent 44 % of the dollar value of the​ portfolio, and asset M will account for the other 56 %. The projected returns over the next 6​ years, 2018-2023​, for each of these assets are summarized in the following​ table: a. Calculate the projected portfolio​ return, r p​, for each of the 6 years. b. Calculate the average expected portfolio​ return, r overbar Subscript p​,...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT