z is the marginal utility per dollar measured in utils x is

z is the 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 MUA = z = 40 – x and MUB = z = 84 – 4y. Assume that the consumer has $40 to spend on A and B; that is, x + y = 40. What is the marginal utility per dollar? What is best way to allocate the expenditure of the $40? I need this anwered in a graph. I cant give a \"written/equation\" answer.

Solution

MUA = 40-x

MUB = 84-4y

From equi-marginal utility law

MUA = MUB

40-x = 84-4y

X + y = 40 given

Solving these above two equations

4y -44 + y = 40

And x = 40-16.8 = 23.2

Marginal utility per dollar MUA = 40-x= 40-23.2 = 16.8

Hence, allocation could be done as follows

X = $ 23.2 amount can be spent on product A

And y = $16.8 can be spent on product B