3. The table below shows the utility (in utils) that a consumer (Arthur) receives from purchasing two goods (cell phones & sunglasses). Cell Phones Sunglasses Utility from Cell Phones (Utils) Quantity of Sunglasses| Utility from Sunglasses Quantity of Cell Phones |50 | 80 1 40 |60 2 100 3 |68 4 110 4 75 Assume cell phones cost $100 and a pair of sunglasses cost $50 and that Arthur's budget is $400. a. Calculate Arthur’s marginal utility for cell phones & sunglasses at each qty. b. Calculate Arthur’s mu per $ for cell phones and sunglasses at each quantity. c. Determine the optimal consumption bundle of cell phone and sunglasses at these prices. d. What is the total amount of utility from the consumption bundle in part c? |Assume the price of cell phones falls to $50 and the price of sunglasses remains the same while your budget falls to $350.. e. Determine the new optimal consumption bundle of cell phone and sunglasses at these prices.
3. The table below shows the utility (in utils) that a consumer (Arthur) receives from purchasing two goods (cell phones & sunglasses). Cell Phones Sunglasses Utility from Cell Phones (Utils) Quantity of Sunglasses| Utility from Sunglasses Quantity of Cell Phones |50 | 80 1 40 |60 2 100 3 |68 4 110 4 75 Assume cell phones cost $100 and a pair of sunglasses cost $50 and that Arthur's budget is $400. a. Calculate Arthur’s marginal utility for cell phones & sunglasses at each qty. b. Calculate Arthur’s mu per $ for cell phones and sunglasses at each quantity. c. Determine the optimal consumption bundle of cell phone and sunglasses at these prices. d. What is the total amount of utility from the consumption bundle in part c? |Assume the price of cell phones falls to $50 and the price of sunglasses remains the same while your budget falls to $350.. e. Determine the new optimal consumption bundle of cell phone and sunglasses at these prices.
Chapter21: Demand: Consumer Choic
Section: Chapter Questions
Problem 1E
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Question
Transcribed Image Text:3. The table below shows the utility (in utils) that a consumer (Arthur) receives from purchasing two
goods (cell phones & sunglasses).
Cell Phones
Utility from Cell
Phones (Utils)
Sunglasses
Utility from Sunglasses
Quantity of Cell Phones
Quantity of Sunglasses
1
50
1
40
80
2
60
3
100
3
68
4
110
4
75
Assume cell phones cost $100 and a pair of sunglasses cost $50 and that Arthur's budget is $400.
a. Calculate Arthur's marginal utility for cell phones & sunglasses at each qty.
b. Calculate Arthur's mu per $ for cell phones and sunglasses at each quantity.
c. Determine the optimal consumption bundle of cell phone and sunglasses at these prices.
d. What is the total amount of utility from the consumption bundle in part c?
Assume the price of cell phones falls to $50 and the price of sunglasses remains the same while
your budget falls to $350..
e. Determine the new optimal consumption bundle of cell phone and sunglasses at these
prices.
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