Question:
Daniel allocates his budget of $24 per week among three goods. Use the following table of the marginal utilities for good A, good B, and good C to answer the questions below:
QA MUA QB MUB QC MUC
1 50 1 75 1 25
2 40 2 60 2 20
3 30 3 40 3 15
4 20 4 30 4 10
5 15 5 20 5 7.5
a) If the price of A is $2, the price of B is $3, and the price of C is $1, how much of each will Daniel purchase in equilibrium?
b) If the price of A rises to $4 while other prices and Daniel's budget remain unchanged, how much of each will he purchase in equilibrium?
c) Using the information from parts (a) and (b), draw the demand curve for good A. Be sure to indicate the price and quantity demanded for each point on the curve