Assessment 8
Started on Friday, 6 September 2024,
State Finished
Completed on Friday, 6 September 2024,
Time taken
Marks 11.00/11.00
Grade 100.00 out of 100.00
Question 1
I confirm
that this assessment will be my own individual work;
that I will not communicate with anyone else in any way during the completion of this
assessment;
that I will not cheat in any way in completing and submitting this assessment.
I confirm.
I do not confirm.
Question 2
Sipho consumes two goods A and B. PA and PB, MUA and MUB and TUA and
TUB represent prices, marginal utility and total utility of A and B, respectively. When
will Sipho achieve consumer equilibrium?
when the ratio between PA and PB differs from the ratio between MUA and MUB
Feedback
Sipho will achieve consumer equilibrium when the ratio of the marginal utilities of
goods A and B (MUA/MUB) is equal to the ratio of their prices (PA/PB).
Normally consumer equilibrium is expressed in terms of weighted marginal utilities,
that is where
However, if we re-arrange the expression we get
This tells us the consumer’s (subjective) valuation of the relative importance of the
two goods is the same as the market’s (objective) valuation as expressed in the price
ratio.
Question 3
Given the prices of goods and services, which of the following indicates consumer
equilibrium?
The consumer spends his or her income in such a way that the weighted marginal
utility (marginal utility per rand) is the same for the goods.
The consumer spends his or her income in such a way that he or she attains the
lowest possible total utility.
2
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