Question

Q4) ) You are given the following marginal utilities of goods X and Y obtained by a consumer. Given that price of X = Rs. 2.5, price of Y = Rs. 1 and income = Rs. 11, find out the optimal combination of goods

No. of unit consumed of a commodity: 1, 2, 3, 4, 5, 6, 7

Marginal utilities of X: 10, 12.5, 10, 7.5, 5, 2.5, 0.5

Marginal utilities of Y: 10, 9, 8, 7, 6, 5, 4

Answer 1

$$p_x=2.5$$

$$p_y=1$$

$$I=11$$

$$2.5x+y=11$$

$$\frac {MU_x}{p_x}= \frac {MU_y}{p_y}$$

$$MU_x=2.5MU_y$$

$$x=2, y=6$$