#11. Timothy is trying to figure out what combination of bags of peanuts and bags of popcorn he should buy with his $15 budget. The price of peanuts is currently $5 per bag and the price of popcorn is currently $2 per bag. If Timothy’s marginal utility from consuming his third bag of peanuts is 15 utils and his marginal utility from consuming his second bag of popcorn is 6 utils, Timothy should a. consume more bags of popcorn. b. consume more bags of peanuts. c. not change his consumption. d. consume fewer bags of peanuts. e. consume fewer bags of popcorn.

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Asked Feb 12, 2020
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#11. Timothy is trying to figure out what combination of bags of peanuts and bags of popcorn he should buy with his $15 budget. The price of peanuts is currently $5 per bag and the price of popcorn is currently $2 per bag. If Timothy’s marginal utility from consuming his third bag of peanuts is 15 utils and his marginal utility from consuming his second bag of popcorn is 6 utils, Timothy should a. consume more bags of popcorn. b. consume more bags of peanuts. c. not change his consumption. d. consume fewer bags of peanuts. e. consume fewer bags of popcorn.

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Expert Answer

Step 1

The following information is given:

Price of peanuts = $5 per bag,

Price of popcorn = $2 per bag,

Budget = $15

The equation for budget constraint can be written as:

Economics homework question answer, step 1, image 1

 

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