What quantities of will you purchase to maximize utility

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Reference no: EM13182920

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

2) The utility-maximization model assumes that the typical consumer is rational and acts on the basis of well-defined preferences. Because income is limited and goods have prices, the consumer cannot purchase all the goods and services he or she might want. The consumer therefore selects the attainable combination of goods that maximizes his or her utility or satisfaction.

Reference no: EM13182920

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