The table below shows Mr. Y's schedule of total utility for oranges and mangoes. The prices of oranges and mangoes are set at $1.00 each. Mr. Y has $10.00 to spend on the goods. Use the information contained in the table to answer the questions that follow:
Oranges |
Total utility |
Mangoes |
Total Utility |
1 |
100 |
1 |
50 |
2 |
190 |
2 |
95 |
3 |
270 |
3 |
135 |
4 |
340 |
4 |
170 |
5 |
400 |
5 |
200 |
6 |
450 |
6 |
225 |
7 |
.490 |
7 |
245 |
8 |
520 |
8 |
260 |
Calculate the marginal utility for all the levels of consumption for the goods.
At equilibrium, how many
(i) Oranges,
(ii) Mangoes.
Will the consumer buy?
(i) State the law of diminishing marginal utility.
(ii) State the marginal condition for utility maximization.
