Given the following marginal utility schedule for good X and good Y for the individual, and given that the price of X and the price of Y are both $1, and that the individual spends all income of $7 on X and Y, Q 1 2 3 4 5 6 7 MUx 15 11 9 6 4 3 1 MUy 12 9 6 5 3 2 1 a. Indicate how much of X and Y the individual should purchase to maximize utility. b. Show that the condition for constrained utility maximization is satisfied when the individual is at his or her optimum. c. Determine how much total utility the individual receives when he or she maximizes utility? How much utility would the individual get if he or she spent all income on X or Y?

Given the following marginal utility schedule for good X and good Y for the individual, and given that the price of X and the price of Y are both $1, and that the individual spends all income of $7 on X and Y, Q 1 2 3 4 5 6 7 MUx 15 11 9 6 4 3 1 MUy 12 9 6 5 3 2 1 a. Indicate how much of X and Y the individual should purchase to maximize utility. b. Show that the condition for constrained utility maximization is satisfied when the individual is at his or her optimum. c. Determine how much total utility the individual receives when he or she maximizes utility? How much utility would the individual get if he or she spent all income on X or Y?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 9P

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