Answer to Question #103124 in Microeconomics for dechas ibrahim

Question

Suppose a particular consumer has 8 birr to be spent on two goods, A and B. The unit price
of good A is 2 birr and the unit price of B is 1 birr. The marginal utility (MU) she gets from
consumption of the goods is given below.
Quantity
1 36 30
2 24 22
3 20 16
4 18 12
5 16 10
6 10 4
A) Based on the cardinal analysis, what is the combination of the two goods that gives
maximum utility to the consumer?
B) What is the total utility at the utility maximization level?

Answer 1

A. good A=36

good B =30

B. 36 + 30= 66