CS 6 CONS EQUIL PROB

# CS 6 CONS EQUIL PROB - CLASS SUPPLEMENT 6 CONSUMER CHOICE...

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CLASS SUPPLEMENT # 6 CONSUMER CHOICE PROBLEM MUc MUb MUa Units 11 80 50 1 10 70 45 2 9 60 40 3 8 50 35 4 7 40 30 5 6 30 25 6 5 20 20 7 4 10 15 8 3 1 10 9 2 -10 5 10 1 -20 4 11 0.9 -25 3 12 Suppose that Carol Campus' tastes are given and fixed as shown in the above table. She is considering the purchase of only these three goods, A, B and C. Below are four problems which specify the prices of each good and Carol's budget. Assume zero saving, i.e., she must spend her entire budget. In each of the following problems when Carol has reached equilibrium: (a) what is the equilibrium quantity of each good purchased, (b) what is the marginal utility per dollar spent on the last unit of each good, and (c) what is Carol's total utility? 1. Pa = Pb = Pc = \$1.00; Budget = \$11 Qa = ____; Qb= ____; Qc = ____; MUa/Pa = ____; MUb/Pb = ____; MUc/Pc = ____; TU = ____ 2. Pa = Pb \$10.00, Pc = \$1.00; Budget = \$36 Qa = ____; Qb= ____; Qc = ____; MUa/Pa = ____; MUb/Pb = ____; MUc/Pc = ____; TU = ____ Is C a normal good?_____
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