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Question
Study the schedule given below and identify how much of the commodity A and commodity B will a utility maximising consumer buy.
| Units | MU of A | units of B | MU of B |
| 1 | 10 | 1 | 30 |
| 2 | 8 | 2 | 24 |
| 3 | 6 | 3 | 20 |
| 4 | 4 | 4 | 16 |
| 5 | 2 | 5 | 14 |
| 6 | 1 | 6 | 8 |
Note: Price of A = ₹ 2 Price of B = ₹ 4 Income = ₹ 20
Numerical
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Solution
For Commodity A: (MU of A) ÷ 2 (price)
| Units | MU of A | MU/₹ |
| 1 | 10 | 5 |
| 2 | 8 | 4 |
| 3 | 6 | 3 |
| 4 | 4 | 2 |
| 5 | 2 | 1 |
| 6 | 1 | 0.5 |
For Commodity B: (MU of B) ÷ 4 (price)
| Units | MU of B | MU/₹ |
| 1 | 30 | 7.5 |
| 2 | 24 | 6 |
| 3 | 20 | 5 |
| 4 | 16 | 4 |
| 5 | 14 | 3.5 |
| 6 | 8 | 2 |
| Step | Chosen Good | MU/₹ | Price | Total Spent |
| 1 | B (1st unit) | 7.5 | ₹ 4 | ₹ 4 |
| 2 | B (2nd unit) | 6 | ₹ 4 | ₹ 8 |
| 3 | A (1st unit) | 5 | ₹ 2 | ₹ 10 |
| 4 | B (3rd unit) | 5 | ₹ 4 | ₹ 14 |
| 5 | A (2nd unit) | 4 | ₹ 2 | ₹ 16 |
| 6 | B (4th unit) | 4 | ₹ 4 | ₹ 20 |
2 units of A and 4 units of B
Total cost = ₹ 2 × 2 + ₹ 4 × 4
= ₹ 4 + ₹ 16
= ₹ 20
At this point, the consumer gets the most satisfaction from ₹ 20, and
`(MU_A)/P_A=(MU_B)/P_B =4`
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