MU and budget Discussion Assignment


MU and budget Discussion Assignment

You are consuming 2 goods: good A and good B

The price of good A=$1 and the Price of good B = $2

Calculate the necessary information to answer the questions below

Number of units             MUA.                 MU B

First                                  10                       24

Second                             8                        20

Third                                7                        18

Fourth                              6                        16

Fifth                                 5                         12

Sixth                                 4                        6

Seventh                            3                        4

1 If you have a budget of $14, how many units of A and how many units of B should you buy?

Group of answer choices

A 2A 4B

B 7A 0B

C 4A 5B

2 When you made the purchase above and you spent your budget of $14 on A (priced $1) and B (priced at $2), will you be at the point of utility maximization?

Group of answer choices

no

yes

It is difficult to say

3 What is the maximum total utility you could get from spending your $14 on A and B

Group of answer choices

121

79

118

4 If you retuned 1 unit of  B and used those $2 to purchased 2 units of A would you be at a higher TU?

Group of answer choices

yes

no

5 If the price of B falls to $1 and the price of A remains at $1, while your budget falls to $10, then how many units of A and B should you purchase?

Group of answer choices

4A 6B

5A 5B

6A 4B

6 What is the maximum TU you can get from a budget of $10 and both A and B cost $1 each.

Group of answer choices

127

43

100

7 What is the MU per dollar spent of the 5th unit of B when the price of B is $2?

Group of answer choices

12

6

90

8 If you do NOT take into consideration the price of A (it is =$1) and the price of B (it is = $2), then which good does this consumer like more, good A or good B?

Group of answer choices

good B

good A

likes them equally

9 What is the maximum TU a consumer could derive when spending all of their income of $14 on only good B?

Group of answer choices

43

118

100

10 If your budget is $10, price of A=$1 and price of B=$2, and you are at the point of utility maximization, what is your TU?

Group of answer choices

78

96

100

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