QUESTION 7 expenditures, income 120 110 100 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 07. The shift from AE1 to AE2 will cause equilibrium income to change to: O (a) 50 Ⓒ (b) 20 O (c) 60 O (d) 75 O AE2 AE1 50 60 70 80 90 100 110 120 income: Q

A4

You are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table.    Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility?     ______units of X and ______units of Y   b. What total utility will you realize?  ______utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? _____units of X and ______units of Y d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first Price of X Quantity Demanded of X $    $

QUESTION 39 48 44 40 36 32 28 24 20 16 12 O 8 4 E.Q a) 12 b) 20 c) 24 d) 30 0 8 16 24 39. The shift from AE1 to AE2 will cause equilibrium income to change to: 32 40 Q AE2 AE1