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The following table gives the marginal utility schedule for two goods, A and B for Margaret. Utility
(Units consumed) (MU of goodA) (MU of goodB)
1 100 1002 90 903 80 804 70 705 60 606 50 507 40 408 30 309 20 2010 10 10
a) How would Margaret's indifference map look like? What is the Marginal Rate of Substitution (MRSA,B) between good A and B?
b) Assume Margaret has an income of $10 and the prices of two goods are $1 each. How much of good A will be purchased?
c) Assume that price of good A rises to $2 per unit, all other things remaining same. How much of good A will be purchased now? What if the price of good A rises to $3 per unit?
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