1= Assume an individual has 20 birr to spend on two products: X1 and X2 each with market price of 2(two) birr. If the total utility the consumer generates from the two products is as given on the table below,
1.1= Select all combinations of X1 and X2 that fulfill the necessary conditions of consumer equilibrium, and from them identify the consumer’s equilibrium purchase size
Q 1 2 3 4 5 6 7 8 9 10 11
TUX1 16 30 41 51 60 68 75 81 86 89 90
TUX2 15 28 40 48 54 59 63 66 68 69 69
The combinations of X1 and X2 that fulfill the necessary conditions of consumer equilibrium are:
Q1: X1=10, X2=10
Q2: X1=9, X2=11
Q3: X1=8, X2=12
Q4: X1=7, X2=13
Q5: X1=6, X2=14
Q6: X1=5, X2=15
The consumer’s equilibrium purchase size is X1=7 and X2=13.