Suppose a consumer has an income of $120, the price of good X is $24 per unit and the price of good Y is $6 per unit. Therefore, the consumer can afford the bundles shown in the table below (without any wasted income). What is this consumer's utility maximizing bundle? Affordable bundles X (units) Y (units) TU, TU, 20 300 1 16 50 260 2 12 95 210 3 8. 135 150 170 80 200 0 4 4 5 1 unit of X and 16 units of Y 2 unit of X and 12 units of Y 3 unit of X and 8 units of Y 4 unit of X and 4 units of Y

The marginal utilities will look like: Consumer's utility maximizing bundle is where: MUxPx=MUyPy This happens when 3 units of X are consumed and 8 units of Y are consumed.Thus, the correct option is (c)

Answered: Suppose a consumer has an income of $120, the price of good X is $24 per unit and the price of good Y is $6 per unit. Therefore, the consumer can afford the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN: 9780190931919

Author: NEWNAN

Publisher: Oxford University Press

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Question

Please help with the following question

Suppose a consumer has an income of $120, the price of good X is $24 per unit and
the price of good Y is $6 per unit. Therefore, the consumer can afford the bundles
shown in the table below (without any wasted income). What is this consumer's
utility maximizing bundle?
Affordable bundles
X (units) Y (units) | TU: TU,
20
300
260
1
16
50
12
95
210
3
8
135 150
170 80
200 0
4
4
5
1 unit of X and 16 units of Y
2 unit of X and 12 units of Y
3 unit of X and 8 units of Y
4 unit of X and 4 units of Y

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