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CBSE Class 11-commerce Answered

Solve the question both parts
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Asked by fishtailfever | 24 Feb, 2020, 12:10: AM
answered-by-expert Expert Answer
To maximise total utility, Ramesh should purchase that combination of both goods, when:
1) MU of the last rupee spent on each commodity is the same i.e MUx/Px = MUy/Py
and  
2) MU falls as consumption increases. 

These two conditions are met when Ramesh purchases 4 units of good X and 1 unit of good Y. This is because at this combination:
1) MU from the last rupee (5th rupee) spent on Y gives same satisfaction of 8 utils as given by the last rupee (4th rupee) spent on good X
and
2) MU of each commodity falls as consumption increases. 
 
Total amount of utility recieved by Ramesh is 46 Utils [ 11+10+9+8+8] when Ramesh purchases 4 units of X and 1 unit of Y
Answered by Christina | 04 Mar, 2020, 05:48: PM
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