3. (a) Suppose a consumer consumes two commodities X and Y. To be on the same utility level, the consumer is always willing to give up exactly 3 units of Y for an additional unit of X. Price of X is 40 and that of Y is 20. The income of the consumer is 400. What percentage of income will the consumer spend on commodity Y?  

(b) The utility levels and the quantity of X and Y consumed by a consumer are given below. The price of X is 30 and the price of Y is 12. Is the consumer maximizing her utility? Give reasons for your answer.                                                                                                                               

Utility             Y                                   X (units)         (Units)                       (Units)	Utility                       Y                             X (units)                (Units)                    (Units)
280                 5                                  10	280                              5                         10
330                 5                                  11	300                              6                         10

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3a In this case the consumer is willing to exactly give up 3 units of good X to get one additional unit of good Y implying that the marginal rate of s... View the full answer