Qualification > Commerce
Economics P3 Questions/Doubts
Azland:
Anyone who has a doubt or question..please post it here and well discuss it here.
I'll start off since this question has been on my mind.
2 The schedule shows the total utility derived by a consumer of a good X at different levels of
consumption.
quantity of X consumed 1 2 3 4 5 6 7
total utility (units) 30 50 65 75 80 83 84
The consumer obtains three units of utility from the last $ she spends on each good that she
purchases.
What is the maximum number of units of X that she will consume if the price of X is $5?
A 3
B 4
C 5
D 6
Mark scheme says A. Does anyone know how?
lastgift:
Hi Azland!
The equilibrium for a single-good is MUx=Px.
You know the price is $5, you will have to look for marginal utility which should be equal to 5.
When you consume 3 units, the marginal utility is 15 and as she obtains 3 units of utility, the MUx= 15/3= 5.
Thus, C.
Azland:
the answer is A..but thanks anyway for the try ;p
lastgift:
Yes if you examine my solution properly the answer is three units which is option A! Just read the option wrong dude.
Dasith:
k its like this, this guy gets 3 units of utility /$ on each good(this means any other good in market) she purchases.If the price of a single unit of good x was $5 then she gets:
@ 1 unit of x : 30 units of utility for $ 5 spent
@ 2 units of x : 20 units of extra utility $ 5 spent
@ 3 units of x : 15 units of extra utility $ 5 spent
She wouldent purchase more than that because the utility falls below 15 units / $ 5, where she would buy another good(not good x) from the market which gives @ least 3 units of utility / $ spent.
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