You are choosing between two goods, X and Y, and your marginal utility from each is as shown below.
|
Units of x
|
MUx
|
Units of Y
|
MUy
|
|
1
|
23
|
1
|
18
|
|
2
|
16
|
2
|
16
|
|
3
|
12
|
3
|
14
|
|
4
|
8
|
4
|
10
|
|
5
|
4
|
5
|
8
|
|
6
|
2
|
6
|
4
|
a. If your income is $9.00 and the prices of X and Y are $2.00 and $1.00, respectively, what quantities of each will you purchase to maximize utility?
b. What total utility will you realize?
c. Assume that, other things remaining unchanged, the price of X falls to $1.00. What quantities of X and Y will you now purchase?
d. Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.
