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Consumer behaviour/ theory of consumer behaviour

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Reference no: EM132526567

Consumer Behaviour/ Theory Of COnsumer Behaviour

QUESTION 1

You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $9 and the prices of X and Y are $2 and $1, respectively. 

Units of X (1,2,3,4,5,6)

MUx ( 10,08,06,04,03,02 )

Units of Y (1,2,3,4,5,6)

MUy (8,7,6,5,4,3 )

Using the information above, answer the following questions. 

  1. What quantities of each will you purchase to maximize utility?
  2. What total utility will you realize?
  3. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase?
  4. Using the two prices and quantities for X, derive a demand schedule (price-quantity-demanded table) for X.

QUESTION 1 Explain graphically how indifference analysis can be used to derive a demand curve.

Reference no: EM132526567

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