Problem #1 Assume that an individual consumes two goods, X and Y . The total uti
ID: 1231228 • Letter: P
Question
Problem #1
Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other good.
The price of X and Y are respectively $40 and $60. Use the following table of total utilities to answer the following questions.
Good
Total Utility of X
Total Utility of Y
1
20
45
2
38
78
3
54
108
4
68
135
5
80
159
6
90
180
a. The marginal utility of the fourth unit of Y is __________.
b. The marginal utility of the fifth unit of X is ___________.
Good
Total Utility of X
Total Utility of Y
1
20
45
2
38
78
3
54
108
4
68
135
5
80
159
6
90
180
Explanation / Answer
A) marginal utility of fourth unity of Y is 135 -108 = 27
B) marginal utility of fifth unit of X is 80 -68 =12
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