The marginal utility schedule for good X and Y are given below. Both the goods are proced at Rs 1 each and income of Rakesh (an individual) is assumed to be Rs 8. Determine, how many units of both the commodities should be purchased by Rakesh to maximize his total utility ?

The marginal utility schedule for good X and Y are given below. Both t

1.	The marginal utility schedule for good X and Y are given below. Both the goods are proced at Rs 1 each and income of Rakesh (an individual) is assumed to be Rs 8. Determine, how many units of both the commodities should be purchased by Rakesh to maximize his total utility ?
Answer» Solution :To maximize the total utility, Raskesh should purchase that COMBINATION of both the goods, when: (i) MU of last rupee spend on each commodity is same, i.e., `(MU_(X))/(P_(X)) = (MU_(Y))/(P_(Y))`, and (ii) MU falls as consumption increases. It happens when Raskesh purchases 6 units of Y and 2 units of X. At this combination `` MU from last rupee (i.e., `8^(th)` rupee) spent on commodity X given the same satisfaction of 10 utils as given by last rupee (i.e., `7^(th)` rupee) spent on commodity Y, and `` MU of each commodity falls as consumption increases. The total satisfaction of 107 utils `(=19 + 17 + 15 + 13 + 12 + 11 + 10 + 10)` will be obtained.