1. In each of the cases listed below determine what this consumer needs to do (in terms of purchasing X and Y) to maximizes their utility.
Price is in dollars per unit. Marginal utility is measured in 'utils.'
|
Case
|
Price of X
|
Marginal Utility of X
|
Price of Y
|
Marginal Utility of Y
|
|
A
|
10
|
2
|
5
|
3
|
|
B
|
12
|
4
|
4
|
2
|
|
C
|
3
|
1
|
6
|
2
|
|
D
|
4
|
2
|
4
|
2
|
|
E
|
8
|
4
|
4
|
3
|
2. As Vice-President Marketing and Sales of a business venture, you have been asked to deliver a pricing strategy to increase revenues for all product lines. Discuss how you would use information on the elasticity of demand for each of the products in developing the strategy.