Suppose that marginal utility of Good X = 100, the price of X is $10 per unit, and the price of Y...
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Suppose that marginal utility of Good X = 100, the price of X is $10 per unit, and the price of Y is $5 per unit. Assuming that the consumer's in equilibrium and is consuming both X and Y, what must the marginal utility of Y be?
Utility Maximization
Total utility is a measurement of the amount of satisfaction of customers from consuming a good or service. Consumers' incomes are limited and thus, consumers face a budget constraint. Utility maximizing rule explains how consumers allocate their money incomes so that their total utility is maximized given the limited budget and prices of the goods.
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- When the consumer's in equilibrium, he purchases the combination of goods and services that maximizes his total utility.
- The utility maximization...
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Utility Maximization: Budget Constraints & Consumer Choice
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