You have $5 to spend on any combination of goods A and B. The price of good A is $2 and the price of good B is $1. You have calculated the following utility values for yourself: $$\begin{array} { | c | c | c | c | c | c | c | }
\hline \text { Units } & \mathrm { TU } _ { \mathrm { A } } & \mathrm { MU } _ { \mathrm { A } } & \mathrm { MU } _ { \mathrm { A } } / \mathrm { P } _ { \mathrm { A } } & \mathrm { TU } _ { \mathrm { B } } & \mathrm { MU } _ { \mathrm { B } } & \mathrm { MU } _ { \mathrm { B } } / \mathrm { P } _ { \mathrm { B } } \
\hline 0 & 0 & & & 0 & & \
\hline 1 & 16 & & & 30 & & \
\hline 2 & 30 & & & 50 & & \
\hline 3 & 40 & & & 58 & & \
\hline 4 & 46 & & & 64 & & \
\hline
\end{array}$$ (a) Fill in the empty columns of the table.
(b) You have purchased 2 units of good A and 1 unit of good B. Are you maximizing your utility? If so, explain why. If not, what combination of goods should you buy?

Question

You have $5 to spend on any combination of goods A and B. The price of good A is $2 and the price of good B is $1. You have calculated the following utility values for yourself: $$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Units } & \mathrm { TU } _ { \mathrm { A } } & \mathrm { MU } _ { \mathrm { A } } & \mathrm { MU } _ { \mathrm { A } } / \mathrm { P } _ { \mathrm { A } } & \mathrm { TU } _ { \mathrm { B } } & \mathrm { MU } _ { \mathrm { B } } & \mathrm { MU } _ { \mathrm { B } } / \mathrm { P } _ { \mathrm { B } } \
\hline 0 & 0 & & & 0 & & \
\hline 1 & 16 & & & 30 & & \
\hline 2 & 30 & & & 50 & & \
\hline 3 & 40 & & & 58 & & \
\hline 4 & 46 & & & 64 & & \
\hline
\end{array}$$ (a) Fill in the empty columns of the table.
(b) You have purchased 2 units of good A and 1 unit of good B. Are you maximizing your utility? If so, explain why. If not, what combination of goods should you buy?

Quizplus · Accepted Answer

The Answer of You have $5 to spend on any combination of goods A and B. The price of good A is $2 and the price of good B is $1. You have calculated the following utility values for yourself: $$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Units } & \mathrm { TU } _ { \mathrm { A } } & \mathrm { MU } _ { \mathrm { A } } & \mathrm { MU } _ { \mathrm { A } } / \mathrm { P } _ { \mathrm { A } } & \mathrm { TU } _ { \mathrm { B } } & \mathrm { MU } _ { \mathrm { B } } & \mathrm { MU } _ { \mathrm { B } } / \mathrm { P } _ { \mathrm { B } } \
\hline 0 & 0 & & & 0 & & \
\hline 1 & 16 & & & 30 & & \
\hline 2 & 30 & & & 50 & & \
\hline 3 & 40 & & & 58 & & \
\hline 4 & 46 & & & 64 & & \
\hline
\end{array}$$ (a) Fill in the empty columns of the table.
(b) You have purchased 2 units of good A and 1 unit of good B. Are you maximizing your utility? If so, explain why. If not, what combination of goods should you buy?

You Have $5 to Spend on Any Combination of Goods