If your income is R9 and the per unit price of X and Y is R2 and R1 respectively, what quantities of each good will you purchase to maximise utility? What total utility will you realise? Units of X MUX MUX / PX Units of Y MUY MUY / PY 1 10 5 1 8 8 2 8 4 2 7 7 3 6 3 3 6 6 4 4 2 4 5 5 5 3 1.5 5 4 4 6 2 1 6 3 2

If your income is R9 and the per unit price of X and Y is R2 and R1 respectively, what quantities of each good will you purchase to maximise utility? What total utility will you realise? Units of X MUX MUX / PX Units of Y MUY MUY / PY 1 10 5 1 8 8 2 8 4 2 7 7 3 6 3 3 6 6 4 4 2 4 5 5 5 3 1.5 5 4 4 6 2 1 6 3 2

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter20: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 4CQ

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Learning Journal prompt: For Unit 4 Learning Journal, you will use the marginal utility formula to choose between two products. Catherine is having dinner at the Yellow Restaurant. She wants desert after eating her entree. She is trying to decide between a cookie or a slice of pie. The cost of a cookie is $5 and the cost of a slice of pie is $8. Refer to the Unit 4 Learning Journal Marginal Utility spreadsheet Compute the marginal utility for cookie and slice of pie Compute the marginal utility per dollar What is the utility maximizing choice for a cookie and slice of pie? Explain what the utility maximizing choice means. Discuss how you could use marginal utility to make consumer choices
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