Exercise

Answer the question on the basis of the following total utility data for products

L and M. Assume that the prices of L and M are $3 and $4, respectively, and

that the consumer’s income is $18. Complete this table (2 extra points).

Units of

Total

MU

MU/Price Units of

Total

– H N m

Utility (L)

MU MU/Price

SHNM JU

Utility (M)

(M)

(M)

1. How many units of the two

2. What level of total utility does the

products will the rational

rational consumer realize in

consumer purchase?

equilibrium?

A. 3 of L and none of M

A. 87 utils

B. 4 of L and 2 of M

B. 104 utils

C. 3 of L and 5 of M

C. 51 utils

D. 2 of L and 3 of M

D. 58 utilsEconomics