Question

Suppose a particular consumer has 8 birr to be spent on two goods, A and B. The unit price of good A is 2 birr and the unit price of B is 1 birr. The marginal utility (MU) she gets from consumption of the goods is given below. Quantity TUA TUB 1 36 30 2 24 22 3 20 16 4 18 12 5 16 10 6 10 4 a. Based on the cardinal analysis, what is the combination of the two goods that gives maximum utility to the consumer? b. What is the total utility at the utility maximization level?

Name: 1 suppose a particular consumer has 8 birr to be spent on two goods a and b the unit price of good a is 2 birr and the unit price of b is 1 birr the marginal utility mu she gets from consump 57054
Uploaded: 2022-06-20T16:50:23-08:00
Duration: 4 min 57 s
Channel: Azat Nurmukhametov
Description: 1 suppose a particular consumer has 8 birr to be spent on two goods a and b the unit price of good a is 2 birr and the unit price of b is 1 birr the marginal utility mu she gets from consump 57054

          Suppose a particular consumer has 8 birr to be spent on two goods, A and B. The unit price of good A is 2 birr and the unit price of B is 1 birr. The marginal utility (MU) she gets from consumption of the goods is given below.

Quantity TUA TUB
1 36 30
2 24 22
3 20 16
4 18 12
5 16 10
6 10 4

a. Based on the cardinal analysis, what is the combination of the two goods that gives maximum utility to the consumer?
b. What is the total utility at the utility maximization level?

Added by Rachel S.

Economics Principles, Problems, and Policies

Campbell R. McConnell, Stanley L. Brue,… 18th Edition

Chapter 7

Instant Answer

Solved by Expert Azat Nurmukhametov

06/20/2022

Step 1

According to the principle of utility maximization, a consumer will allocate their budget in such a way that the last birr spent on each good provides the same level of marginal utility (MU). This is also known as the equi-marginal principle. Show more…

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Suppose a particular consumer has 8 birr to be spent on two goods, A and B. The unit price of good A is 2 birr and the unit price of B is 1 birr. The marginal utility (MU) she gets from consumption of the goods is given below. Quantity TUA TUB 1 36 30 2 24 22 3 20 16 4 18 12 5 16 10 6 10 4 a. Based on the cardinal analysis, what is the combination of the two goods that gives maximum utility to the consumer? b. What is the total utility at the utility maximization level?