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2} Suppose that the price of good X is $1.00 and the price of good Y is $3. You have $90 to spend and your

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2} Suppose that the price of good X is $1.00 and the price of good Y is $3. You have $90 to spend and your preferences over X and Y are dened as: foy) = 123le 18 Points Keep in mind that we review this concept because consumer choice is based on their preferences. People demand items thatlll their Utility @erhaps happiness). As a result, we need to visualize how an individual 's budget is allocated to create the highest level of Utility. a. Calculate the marginal utility of X (remember, this is the change in utility resulting from a slight increase in consumption of X). You can either do this using calculus or an excel spreadsheet both workI recommend an excel spreadsheet. If you use calculus, show your work; if you use a spreadsheet, please submit the spreadsheet. (3 Points) 1). Calculate the Marginal Utility of Y (3 Points} c. What is the optimal Choice ofX and Y given the P): = $1.50, PT: $3 and I = $90. This answer requires a numerical answer. Ifyou use a spreadsheet, please submit the spreadsheet; if you derive the answer, please show your work. (4 Points) fX,Y} = xwyw + M90 1.50X 3Y)this is a hint. d. H'Income is decreased to $81 (I1 = $81) would your optimal choice ofX and Y change and why. This does not require math. (2 Points) e. You don't need math to answer this question. In #Zc, your income is $90 and in #2d, your income is $81. 1|Which will have a higher level of Utility (#2c or #2d) {2 Points)

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