Question

Given below is the utility schedule of a consumer for commodity X. The price of the commodity is $ 6 per unit. How many units should the consumer purchase to maximise satisfaction?
(Assume that the utility is expressed in utils and 1 util =$ 1).
Consumption TU MU
1 10 10
2 18 8
3 25 7
4 31 6
5 34 3
6 34 0​

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:consumer attains equilibrium when: MUx/Px=MU of money or, when MUx=Px.MU of money

substituting the given values, the consumer attains

equilibrium when:

MUx=6×1= 6

implying that the equilibrium is attained when 4 units of the commodity are purchased. (The table show that when MUx=6,4) units are purchases)

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

Explanation: