Question
Ricardo has $86 to spend, the following is his Marginal Uitility MU, amounts that he gets from consuming goods A,B,C,& D, and in column 5
Ricardo has $86 to spend, the following is his Marginal Uitility MU, amounts that he gets from consuming goods A,B,C,& D, and in column 5 is the MU for each $1 of saving. Price are as follows Pa= $9, Pb= $8, Pc = $3, Pd= $24.
A what quantities of A,B,C,D will Ricardo consume to maximize his utility? 10 pts
B How much will Ricardo save? 5 pts
Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 |
Units A MUa | Units B MUb | Units C MUc | Units D MUd | Number of $ Saved MU | |
1 72 | 1 24 | 1 14 | 1 36 | 1 5 | |
2 54 | 2 16 | 2 12 | 2 30 | 2 4 | |
3 45 | 3 12 | 3 9 | 3 24 | 3 3 | |
4 36 | 4 8 | 4 6 | 4 20 | 4 2 | |
5 27 | 5 6 | 5 3 | 5 18 | 5 1 | |
6 18 | 6 3 | 6 1 | 6 16 | 6 | |
7 9 | 7 1 | 7 | 7 12 | 7 1/4 |
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