Chapter 20 Demand Theory and Consumer Choice Homework Questions
1. Use the utility maximizing rule to determine how many of goods A, B, and C to
purchase with a $22 budget.
List the order in which the goods would be purchased.
|
Good A costs $4.00 |
Good B costs $3.00 |
Good C costs $2.00 |
|
Qt. MU MU/$ |
Qt. MU MU/$ |
Qt. MU MU/$ |
|
1 8 2.0 |
1 6 2.0 |
1 2.0 1.0 |
|
2 6 1.5 |
2 5 1.67 |
2 2.0 1.0 |
|
3 4 1.0 |
3 4 1.33 |
3 1.5 0 .75 |
|
4 2 0.5 |
4 3 1.0 |
4 1.5 0.75 |
| Answer | ||
2. Explain why most consumers receive a surplus when purchasing a product.
3. Graph the following data and calculate the MRSXY.
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