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Monica consumes only goods A and B. Suppose that her marginal utility from consuming good A is equal to 0.25/Qa, and her marginal utility from consuming good B is 0.75/Qb. If the price of A is $0.50, the price of B is $4.00, and Monica's income is $120.00, how much of good A will she purchase

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Answer:

120

Explanation:

Calculation for how much of good A will she purchase

First step is to calculate Qa

1 / 0.5Qa = 1 / 4Qb

0.5Qa = 4Qb

Qa = 4 / 0.5 Qb

Qa = 8Qb

Second step is to calculate Qb

Qb = 120/8

Qb = 15

Now let calculate how much of good A will she purchase

Using this formula

Good A=Qa* Qb

Good A= 15 * 8

Good A = 120

Therefore how much of good A will she purchase is 120

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