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The following table gives the marginal utility schedule

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2. The following table gives the marginal utility schedule for two goods, A and B for Margaret.MU=marginal Utility;(Units consumed) (MU of goodA) (MU of goodB);1 100 100;2 90 90;3 80 80;4 70 70;5 60 60;6 50 50;7 40 40;8 30 30;9 20 20;10 10 10;a) How would Margaret's indifference map look like? What is the Marginal Rate of Substitution (MRSA,B) between good A and B?;b) Assume Margaret has an income of $10 and the prices of two goods are $1 each. How much of good A will be purchased?;c) Assume that price of good A rises to $2 per unit, all other things remaining same. How much of good A will be purchased now?;What if the price of good A rises to $3 per unit?;d) Draw an approximate diagram of Margaret?s demand curve for A.

 

Paper#28508 | Written in 18-Jul-2015

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