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Define marginal utility

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Reference no: EM132503749

a) Given the following demand function for beef (kg), P = 100 -2Q

i) By how much would the price have to fall for consumers to be willing to buy 1 more kg of beef per day?

ii) If the price decreases by N$0.7, by how much will the demand changed?

b) Define marginal utility. Provide an argument why to maximize total utility of good x and good y, the consumer should consume until the ratio of marginal utilities over price is the same across both goods.

c) Consider John who consumes two goods, (X and Y), with prices Px = N$24, Py = 12 and Income I = 120

d) Construct budget constraint

e) Draw John's budget line with good X on the horizontal axis.

f) Use a graph to show the effect of an increase in income from N$120 to N$150.

g) What will happen to the slope of the budget line if the price of good X decreases to N$18?

Reference no: EM132503749

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