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    Calculatin the best allocation of budget between two goods

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    Advanced Analysis, let MUa=z=10-x and MUb=z=21-2y, where is marginal utility per dollar measured in utils, x is the amount spent on product A, and y is the amount spent on product B. Assume that the consumer has $ 10 to spend on A and B_that is , x+y=10. How is the $10.00 best allocated between A and B? How much utility will the marginal dollar yield?

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    https://brainmass.com/economics/personal-finance-savings/calculatin-the-best-allocation-of-budget-between-two-goods-444903

    Solution Preview

    At optimal level of allocation between A and B, MUa=MUb i.e.

    10-x=21-2y
    x-2y=-11 ...

    Solution Summary

    Solution calculates the best allocation of budget between two given goods.

    $2.19

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