Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
20th Edition
ISBN: 9780077660819
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 7, Problem 4P
Subpart (a):
To determine
Utility maximizing output.
Subpart (b):
To determine
Utility maximizing output.
Subpart (c):
To determine
Utility maximizing output.
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Columns 1 through 4 of the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are $18, $6, $4, and $24, respectively, and that Ricardo has an income of $105.
What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility?
How many dollars will Ricardo choose to save?
Check your answers by substituting them into the algebraic statement of the utility‑maximizing rule. In other words, show it works when using this rule.
Please explain thoroughly because I do not understand it.
25
Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various
amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C,
and D are, respectively, $9, $3, $2, and $6 and that Ricardo has an income of $71.
Column 1
Column 2
Column 3
Column 4
Column 5
Units of
Good A
Units of
Units of
Units of
MU
MU
MU
MU
Good B
Good C
Good D
Number of
Dollars Saved
MU
1
72
1
24
1
15
1
36
1
5
2
54
2
15
2
12
2
30
2
4
3
45
3
12
3
8
3
24
3
3
4
36
4
9
4
7
4
18
4
2
5
27
5
7
5
5
5
13
5
1
6
18
6
5
6
4
6
7
6
0.50
7
15
7
2
7
3.5
7
4
7
0.25
8
12
8
1
8
3
8
2
8
0.13
Instructions: Enter your answers as a whole number.
a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility?
4 units of A
3 units of B
units of C
units of D
b. How many dollars will Ricardo choose to save?
Chapter 7 Solutions
Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
Ch. 7.1 - Prob. 1QQCh. 7.1 - Prob. 2QQCh. 7.1 - Prob. 3QQCh. 7.1 - Prob. 4QQCh. 7.A - Prob. 1ADQCh. 7.A - Prob. 2ADQCh. 7.A - Prob. 3ADQCh. 7.A - Prob. 1ARQCh. 7.A - Prob. 2ARQCh. 7.A - Prob. 1AP
Ch. 7.A - Prob. 2APCh. 7.A - Prob. 3APCh. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7P
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