Question

You are trying to figure out what combination of shoes and shirts to buy, given that

      you currently have an income of $600.00 to spend. The price of product A is

      $100.00, while the price of product B is $50.00.

      Below is a list of the total and marginal utility you derive from consuming both

      products.

                        PRODUCT A                                                 PRODUCT B

Quantity Total Utility Marginal Utility       Quantity Total Utility Marginal Utility

     0                       0              ------                        0                     0              ----

    1                 8000              _____                    1               _____              5000

     2                 _____              7000                       2               _____              4000

     3                 _____              6000                       3               _____              3000

     4                 26000              ______                   4               _____              2500               

     5                 30000              ______                   5               _____              2000   

1. Fill in the blanks in the table above.
2. Given your income of $600.00, what combination of the two products will you purchase?

Answer 1

Product Product B И О MU 90€ 2 } 14 Š TU 0 S000 ISOOU 21000 26000 30000 8000 7000 600 o Sou o 400 0 @ 2 3 4 TU O 5000 9000 12000 1450o 16suo SONO 4000 300o 2500 2000 Optimal consumptich when muna mus A when A = 4 n=1 4X100 + Sox . 450 C Budget Not optimal

when A=5 B=2 SX100 + 50X2 = 600 - - Budget A=5 & B= 2 =) optimal CS