Answer the question on the basis of the following marginal utility data for products X and Y.Assume that the prices of X and Y are $4 and $2 respectively and that the consumer's income is $18. $Y‾1614121086\begin{array}{c}\begin{array}{c}\text {Units}\\\underline{\text {of X }}\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Utility, X}}\\20\\16\\12\\8\\6\\4\end{array}\begin{array}{c}\text {Units}\\\underline{\text {of Y }}\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Utility, Y}}\\16\\14\\12\\10\\8\\6\end{array}\end{array}$
Refer to the data.Which of the following represents the demand schedule for X?

A)
$\underline{P} \quad\quad$ $Qd‾\underline{Q_{d}}$
$\$ 4 \quad\quad2$
2 $\quad\quad 5$ .
B)
$\underline{P} \quad\quad$ $Qd‾\underline{Q_{d}}$
$\$ 4 \quad\quad2$
2 $\quad\quad 5$
C)
$\underline{P} \quad\quad$ $Qd‾\underline{Q_{d}}$
$\$ 4 \quad\quad3$
2 $\quad\quad 6$
D)
$\underline{P} \quad\quad$ $Qd‾\underline{Q_{d}}$
$\$ 4 \quad\quad3$
2 $\quad\quad 5$ .

Question

Answer the question on the basis of the following marginal utility data for products X and Y.Assume that the prices of X and Y are $4 and $2 respectively and that the consumer's income is $18.

Y‾1614121086\begin{array}{c}\begin{array}{c}\text {Units}\\\underline{\text {of X }}\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Utility, X}}\\20\\16\\12\\8\\6\\4\end{array}\begin{array}{c}\text {Units}\\\underline{\text {of Y }}\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Utility, Y}}\\16\\14\\12\\10\\8\\6\end{array}\end{array}

Refer to the data.Which of the following represents the demand schedule for X?

A)

\underline{P} \quad\quad

Qd‾\underline{Q_{d}}

\$ 4 \quad\quad2

2

\quad\quad 5

.
B)

\underline{P} \quad\quad

Qd‾\underline{Q_{d}}

\$ 4 \quad\quad2

2

\quad\quad 5

C)

\underline{P} \quad\quad

Qd‾\underline{Q_{d}}

\$ 4 \quad\quad3

2

\quad\quad 6

D)

\underline{P} \quad\quad

Qd‾\underline{Q_{d}}

\$ 4 \quad\quad3

2

\quad\quad 5

.

Fiona McLain · Accepted Answer

Final Answer : A, Explanation :  The demand schedule for X is determined by the consumer's income and the marginal utility per dollar spent on X and Y. Given the prices of X ($4) and Y ($2), and the consumer's income ($18), the consumer will allocate their budget to maximize utility. The marginal utility per dollar for X and Y can be calculated by dividing the marginal utility by the price of each good. For X, the marginal utility per dollar at the first unit is 20/4 = 5, and for Y, it's 16/2 = 8 at the first unit. The consumer will continue to purchase each good until the marginal utility per dollar spent is equalized for both goods or until the budget is exhausted. Given the data, the consumer will purchase units of X and Y in such a way that maximizes their utility within the $18 budget, which corresponds to the demand schedule provided in option A.

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