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Jake allocates his budget of $24 per week among three goods. Use the following table of marginal utilities for good A, good B, and good
Jake allocates his budget of $24 per week among three goods. Use the following table of marginal utilities for good A, good B, and good C to answer the questions below.
QA | MUA | QB | MUB | QC | MUC |
1 | 50 | 1 | 75 | 1 | 25 |
2 | 40 | 2 | 60 | 2 | 20 |
3 | 30 | 3 | 40 | 3 | 15 |
4 | 20 | 4 | 30 | 4 | 10 |
5 | 15 | 5 | 20 | 5 | 7.5 |
- If the price of A is $2, the price of B is $3, and the price of C is $1, how much of each does Jake purchase in equilibrium?
- If the price of A rises to $4 while other prices in Jake's budget remain unchanged, how much does he purchase in equilibrium?
- Using the information from parts (a) and (b), draw the demand curve for good A. Be sure to indicate the price and quantity demanded for each point on the curve.
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