The following table gives the marginal utility schedule for two goods, A and B for Margaret. Utility
(Units consumed) (MU of goodA) (MU of goodB)
1 100 100
2 90 90
3 80 80
4 70 70
5 60 60
6 50 50
7 40 40
8 30 30
9 20 20
10 10 10
a) How would Margaret's indifference map look like? What is the Marginal Rate of Substitution (MRSA,B) between good A and B?
b) Assume Margaret has an income of $10 and the prices of two goods are $1 each. How much of good A will be purchased?
c) Assume that price of good A rises to $2 per unit, all other things remaining same. How much of good A will be purchased now? What if the price of good A rises to $3 per unit?