KEY QUESTION You are choosing between two goods, X and Y, and your marginal utility from each is as shown on the next page. If your income is $9 and the prices of X and Y are

$2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize?

Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase?

Using the two prices and quantities for X, derive a demand schedule (price–quantity-demanded table) for X.

Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3