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The MU schedule for goods A and B is given. Price of both the goods is ₹1 each and income of Mr. Narendra is assumed to be ₹6.How many units of both the goods should be purchased by him so that his total utility is maximized?
The MU schedule for goods A and B is given. Price of both the goods is ₹1 each and income of Mr. Narendra is assumed to be ₹6.How many units of both the goods should be purchased by him so that his total utility is maximized?
| Units | 1 | 2 | 3 | 4 | 5 | 6 |
| MUA | 14 | 12 | 10 | 6 | 4 | 2 |
| MUB | 13 | 12 | 10 | 3 | 2 | 1 |
At equilibrium,
MUA÷PA = MUB ÷ PB = MUm
and the entire income is spent on commodity-X and commodity-Y.
Since PA = PB = 1,
MUA = MUB = MUM
The consumer gets maximum satisfaction when he purchases 3 units of A and 3 units of B. Because at this combination, MUA = MUB = 24 and the entire income of Rs 6 gets spent.
Regards
MUA÷PA = MUB ÷ PB = MUm
and the entire income is spent on commodity-X and commodity-Y.
Since PA = PB = 1,
MUA = MUB = MUM
The consumer gets maximum satisfaction when he purchases 3 units of A and 3 units of B. Because at this combination, MUA = MUB = 24 and the entire income of Rs 6 gets spent.
Regards