You Have $5 to Spend on Any Combination of Goods

question 79

Essay

You have $5 to spend on any combination of goods A and
A.The utility maximizing combination here is to buy 1 of A and 3 of
B.Are you maximizing your utility? If so,explain why.If not,what combination of goods should you buy?
(a)The completed table:

(b)If you purchase 2 of A and 1 of B you are not maximizing your utility.To see why not,use the utility maximizing rule.For good A compute MU_A/P_A = 7 and for good B compute MU_B/P_B = 30.Since MU_B/P_B > MU_A/P_A you are not at a utility maximizing combination of goods;you should reallocate your $5 and buy more B and less
B.The price of good A is $2 and the price of good B is $1.You have calculated the following utility values for yourself:

(a)Fill in the empty columns of the table.
(b)You have purchased 2 units of good A and 1 unit of good
B.With this latter combination we see that MU_A/P_A = 8 = MU_B/P_B and we have satisfied the utility maximizing rule.

---

Definitions:

Competent Practitioners

Individuals who possess the required skills, knowledge, and ability to perform their professional duties effectively.

Medicalized

The process by which human conditions and problems come to be defined and treated as medical issues, often involving interventions by health professionals.

Professionalization

The process of becoming a professional; acquiring the skills, knowledge, and standards needed for a profession, often involving formal education and training.

Professionalization of Medicine

The process by which the practice and study of medicine have become increasingly structured and formally recognized as a profession, with specific training, ethical, and standards criteria.