The table shows the total utility ( TU ) that Jeremy receives from consuming dif
ID: 1257636 • Letter: T
Question
The table shows the total utility (TU) that Jeremy receives from consuming different amounts of two goods, X and Y, per month.
Quantity
TUX
MUX
MUX/PX
TUY
MUY
MUY/PY
0
0
0
1
50
75
2
88
117
3
121
153
4
150
181
5
175
206
6
196
225
7
214
243
8
229
260
9
241
276
Fill in the other columns of the table by calculating the marginal utilities for goods X and Y and the ratios of marginal utilities to price for the two goods. Assume that the price of both goods X and Y is $3. Be sure to use the “midpoint convention” when you fill out the table.
If Jeremy allocates $30 to spend on both goods, how many units will he buy of each?
How much will Jeremy spend on each good at the utility maximizing combination?
How much total utility will Jeremy experience by buying the utility-maximizing combination?
Suppose the price of good Y increases to $6. How many units of X and Y will he buy to maximize his utility now?
Quantity
TUX
MUX
MUX/PX
TUY
MUY
MUY/PY
0
0
0
1
50
75
2
88
117
3
121
153
4
150
181
5
175
206
6
196
225
7
214
243
8
229
260
9
241
276
Explanation / Answer
MUX MUY 0 0 38 42 33 36 29 28 25 25 21 19 18 18 15 17 12 16 -- -- MUX/PX PUY/PY 0 0 12.66 14 11 12 9.66 9.33 8.33 8.33 7 6.33 6 6 5 5.66 4 5.33 -- --
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