Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A consumer finds only three products, X, Y, and Z. are for sale. The amount of utility yielded by their consumption is shown in

 

A consumer finds only three products, X, Y, and Z. are for sale. The amount of utility yielded by their consumption is shown in the table below. Assume that the prices of X, Y, and Z are $10, 52, and $8, respectively, and that the consumer has an income of $74 to spend taj Complete the following table by computing the marginal unity per dolar for successive units of X, Y, and Z to one or two decimal places (b) How many units of X, Y, and Z will the consumer buy when maximizing utility and spending all income? Show this result using the utility maximization formula (c) Why would the consumer not be maximizing utility by purchasing 2 units of X, 4 units of Y, and 1 unit of 27 Product X Product Y Quantity Utility Marginal Quantity Utility Marginal Utility pers Utility per$ 42 82 118 4 148 S 170 6 182 7 182 1 2 3 1 2 3 4 5 6 7 14 26 36 44 S 50 54 56.4 Product Z Quantity Utility Marginal Utility pers 1 2 3 4 5 6 7 8838228 60 100 110 116 120

Step by Step Solution

3.49 Rating (146 Votes )

There are 3 Steps involved in it

Step: 1

a To compute the marginal utility per dollar for successive units of X Y and Z we need to calculate the change in utility for each additional unit div... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Economics Foundations of Business Analysis and Strategy

Authors: Christopher Thomas, S. Charles Maurice

12th edition

1260004759, 9781260004755, 78021715, 78021718, 78021901, 978-0078021909

More Books

Students also viewed these Economics questions

Question

5.6 Evaluate methods used to treat phobic disorders.

Answered: 1 week ago