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Unformatted text preview: c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. 7-4 ( Key Question ) You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (price-quantity-demanded table) for X. Units of X MU x Units of Y MU y 1 2 3 4 5 6 10 8 6 4 3 2 1 2 3 4 5 6 8 7 6 5 4 3...
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This note was uploaded on 04/12/2010 for the course ECO 1231241 taught by Professor K during the Spring '09 term at American College of Computer & Information Sciences.
- Spring '09