Answered: Column 1 Column 2 Column 3 Column 4…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $18, $6, $4, and $24 and that Ricardo has an income of $106. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.

Column 1
Column 2
Column 3
Column 4
Column 5
Units
Units
Units
Units
Number of
of A
MU
of B
MU
of C
MU
of D
MU
Dollars Saved
MU
1
72
1
24
1
15
1
36
1
5
54
2
15
2
12
30
2
4
45
3
12
3
8
3
24
3.
3
4
36
4
9.
4
7
4
18
4
2
27
5
7
5
5
5
13
1
18
6.
5
4
6.
7
6.
7
15
7
7
7
8.
12
8
1
8
8
8.

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