Answer the question on the basis of the following two schedules,which show the amounts of additional satisfaction (marginal utility)that a consumer would get from successive quantities of products J and K. $\begin{array}{c}
\begin{array}{ccc}
Unit&&\
\text { of } J & & M U_{j} \
\hline
1 & & 56 \
2 & & 48 \
3 & & 32 \
4 & & 24 \
5 & & 20 \
6 & & 16 \
7 & & 12
\end{array}
\begin{array}{ccc}
Unit&&\
\text { of } K & & M U_{k} \
\hline
1 & & 32 \
2 & & 28\
3 & & 24\
4 & & 20\
5 & & 12\
6 & & 10\
7 & & 8
\end{array}
\end{array}$ Refer to the data.What level of total utility is realized from the equilibrium combination of J and K,if the consumer has a money income of $52 and the prices of J and K are $8 and $4 respectively?
A) 156 utils
B) 124 utils
C) 276 utils
D) 36 utils

Question

Quizplus · Accepted Answer

To find the equilibrium combination of J and K, we first calculate the marginal utility per dollar (MU/P) for each product. For J: MU/P at $8 per unit are 56/8=7, 48/8=6, 32/8=4, 24/8=3, 20/8=2.5, 16/8=2, 12/8=1.5. For K: MU/P at $4 per unit are 32/4=8, 28/4=7, 24/4=6, 20/4=5, 12/4=3, 10/4=2.5, 8/4=2. The consumer will allocate their $52 to maximize utility, purchasing units of J and K where MU/P is highest until the budget is exhausted. Starting with the highest MU/P, the consumer would first buy K (since its MU/P starts higher at 8) and then J. With $52, the consumer can buy 3 units of J ($8*3=$24) and 5 units of K ($4*5=$20), spending $44, leaving $8 unspent which is not enough for another unit of J but enough for 2 more units of K, maximizing utility within the budget. The total utility from 3 units of J is 56+48+32=136 utils and from 5 units of K is 32+28+24+20+12=116 utils, making the total utility 136+116=252 utils. However, since none of the options match this calculation, and considering the possibility of a miscalculation or misunderstanding in the allocation strategy or the utility calculation, the correct approach involves maximizing utility within the given budget constraints and prices, but it seems there was an error in my calculation process as the provided options do not align with the calculated total utility.

Answer the Question on the Basis of the Following Two