You are choosing between two goods, X and Y, and your marginal utility from each is as shown below.
| Units of x |
MUx |
Units of Y |
MUy |
| 1 |
23 |
1 |
18 |
| 2 |
16 |
2 |
16 |
| 3 |
12 |
3 |
14 |
| 4 |
8 |
4 |
10 |
| 5 |
4 |
5 |
8 |
| 6 |
2 |
6 |
4 |
a. If your income is $9.00 and the prices of X and Y are $2.00 and $1.00, respectively, what quantities of each will you purchase to maximize utility?
b. What total utility will you realize?
c. Assume that, other things remaining unchanged, the price of X falls to $1.00. What quantities of X and Y will you now purchase?
d. Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.