Question

A consumer’s marginal utility function of two goods X and Y is as follows:
Mux = 120 – 10x
Muy = 160 – 20y
Price of x = Rs. 10/-
Price of y = Rs. 20/-
Income = Rs. 220/
How many units of good X and Y must be consumed in order to maximize his total utility?
Calculate the total utility from the consumption of 3 units of good X and 4 units of
good Y.

Answer 1

Answer:

Consumer attains equilibrium when:

P

x

MU

x

=MU of Money

or, when MU

x

=P

x

. MU of Money,

Substuting the given values, the consumer attains equlibrium when:

MU

x

=6×1=6.

Implying that the equilibrium is attained when 4 units of the commodity are purchased. (The table show that when MU

X

=6,4) units are purchased )

Therefore, the consumer should purchase 4 units in order maximum satisfaction.

Answer 2

Answer:

sorry dear,

i can't understand this question

Explanation: