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Answer to Question #68012 in Microeconomics for usman

Question #68012
steak meals MU of steak price per hamburger meals MU of hamburger price of
per month meal steak meal per month meals hamburger meal
1 20 10 1 15 5
2 15 10 2 8 5
3 12 10 3 6 5
4 10 10 4 4 5
5 8 10 5 2 5

using marginal utility(MU) schedule given budget is 45 and assume the price per hamburger meal fall from 5 to 2 all other factor held constant what is the total utility realized?
Expert's answer
Qs MUs Ps Qh MUh Ph
1 20 10 1 15 5
2 15 10 2 8 5
3 12 10 3 6 5
4 10 10 4 4 5
5 8 10 5 2 5

Using marginal utility(MU) schedule given budget is 45 and assuming the price per hamburger meal fall from 5 to 2 all other factor held constant, the utility-maximizing combination is at point, where MUs/Ps = MUh/Ph or MUs/10 = MUh/2, so Qs = 4 and Qh = 5 and the total utility realized is the sum of marginal utilities, so TU = 92 units.

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