Question

The following table shows the Total utility or Marginal utility for three goods apple and mango and orange the price of apple=10 Ryals the price of mango=2 Ryals and price of orange-8 Ryals Complete the following table by calculating the missing data (1 Find the optimum quantity that must be consumed from each goods in (2 order to achieve the maximum utility. Calculate the maximum total utility that you can achieve by consuming (3 . optimum of the three goods Orange Apple Quantity Total Mango Marginal utility 14 Total utility utility 42 182 182 140 2

Answer 1

1.)

Orange Apple Quantity Mango Marginal Margi -nal Utility Total Utility Margi -na! Utility | 14 10 42 42 | 8 46 46 2 8 34 802 | 8 24 104 2 | 8 | 16 | 120 2 8 10 130 2 | 8 6 136 | 2 8 4 140 2 14 12 10 8 0 4 2 10 50 | 10 | 22 | 4 10 12 56 10 o 00 182 182

2.) The Optimum Quantity for Orange is 7, as at Q = 7, the total utility from oranges is maximized, i.e, TU = 140.

The Optimum Quantity for Mango is 7, as at Q = 7, the total utility from mangoes is maximized, i.e, TU = 56.

The Optimum Quantity for Apple is 6, as at Q = 6, the total utility from apples is maximized, i.e, TU = 182. [After Q = 6, one unit of consuming apple will give no marginal utility. So, he / she will not buy 7 units of apples]

3.) So, the maximum total utility by achieving optimum of the three goods is ( TU_max^Orange + TU_max^Mango + TU_max^Apple) = (140 + 56 + 182) = 378 .

Hope, all the answers are clear to you, my friend!!!