... under a given budget. The prices and marginal benefits of the last units of A and B are denoted PA’ PB’ MBA’ and MBB’
a). If PA = $20, PB = $15, MBA = 400, and MBB = 600, what should the decision maker do?
b). If PA = $20, PB = $30, MBA = 200, and MBB = 300, what should the decision maker do?
c). If PA = $20, PB = $40, MBA = 300, and MBB = 400, how many units of A can be obtained if B is reduced by one unit? How much will benefits increase if this exchange is made?
d). If the substitution in part c continues to equilibrium and MBA falls to 250, what will MBB be?