### Optimal quantity and total utility at equilibrium

Assignment Help Macroeconomics
##### Reference no: EM1316064

Given the table of marginal utilities for CD's and century books, calculate the optimal quantity and total utility at equilibrium.

 Quantity per month MU classical cd's MU 18th century books 1 90 120 2 20 16 3 16 12 4 12 4 5 8 2

a) She spends \$75 per month. Cd is \$15 and books are \$15. How many cds and books can she buy each month.

b) Suppose she got a raise and spends an additional \$30 a month. How many will she buy each month?

 Quantity per month MU classical cds TU classical cds MU 18th century books TU 18th century books 1 90 120 2 20 16 3 16 12 4 12 4 5 8 2

c) Finish the Table. MU-marginal utility; TU- total utility

d) What is Sarah's total utility at equilibrium?

e) Draw Sarah's budget line for part a and her budget line for part b on the same graph.

f) On the same graph show how sarahs utility changed from part a to part b using indifference curves.

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