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» <html><body><p></p>Solution :To maximize the total utility, Raskesh should purchase that <a href="https://interviewquestions.tuteehub.com/tag/combination-922669" style="font-weight:bold;" target="_blank" title="Click to know more about COMBINATION">COMBINATION</a> of both the goods, when: <br/> (i) MU of last rupee spend on each commodity is same, i.e., `(MU_(X))/(P_(X)) = (MU_(Y))/(P_(Y))`, and <br/> (ii) MU falls as consumption increases. <br/> It happens when Raskesh purchases <a href="https://interviewquestions.tuteehub.com/tag/6-327005" style="font-weight:bold;" target="_blank" title="Click to know more about 6">6</a> units of Y and 2 units of X. At this combination<br/> `**` MU from last rupee (i.e., `8^(th)` rupee) spent on commodity X given the same satisfaction of <a href="https://interviewquestions.tuteehub.com/tag/10-261113" style="font-weight:bold;" target="_blank" title="Click to know more about 10">10</a> utils as given by last rupee (i.e., `<a href="https://interviewquestions.tuteehub.com/tag/7-332378" style="font-weight:bold;" target="_blank" title="Click to know more about 7">7</a>^(th)` rupee) spent on commodity Y, and <br/> `**` MU of each commodity falls as consumption increases. <br/> The total satisfaction of 107 utils `(=19 + 17 + 15 + 13 + 12 + <a href="https://interviewquestions.tuteehub.com/tag/11-267621" style="font-weight:bold;" target="_blank" title="Click to know more about 11">11</a> + 10 + 10)` will be obtained.</body></html>


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