Columns 1 through 4 in the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the price of good A is $18.00, the price of good B is $6.00, the price of good C is $4.00 and the price of good D is $12.00. Ricardo's income is $142.00.
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 |
Units of
Good A | MU | Units of
GoodB | MU | Units of
Good C | MU | Units of
Good D | MU | Number of Dollars Saved | MU |
| 1 | 72 | 1 | 24 | 1 | 15 | 1 | 36 | 1 | 5.00 |
| 2 | 54 | 2 | 15 | 2 | 12 | 2 | 30 | 2 | 4.00 |
| 3 | 45 | 3 | 12 | 3 | 8 | 3 | 24 | 3 | 3.00 |
| 4 | 36 | 4 | 9 | 4 | 7 | 4 | 18 | 4 | 2.00 |
| 5 | 27 | 5 | 7 | 5 | 5 | 5 | 13 | 5 | 1.00 |
| 6 | 18 | 6 | 5 | 6 | 4 | 6 | 7 | 6 | 0.50 |
| 7 | 15 | 7 | 2 | 7 | 3.5 | 7 | 4 | 7 | 0.25 |
| 8 | 12 | 8 | 1 | 8 | 3 | 8 | 2 | 8 | 0.13 |
Instructions: Enter only whole numbers for your numeric answers.a.What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility?
Price of good A: $18, Units of A:
Price of good B: $6, Units of B:
Price of good C: $4, Units of C:
Price of good D: $24, Units of D:
b.How many dollars will Ricardo choose to save? $
c.Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.
( $×) + ( $×) + ( $×) + ( $×)+ $= $
rev: 09_26_2011