6 Rebecca consumes both iced tea and coffee. Iced tea is priced at $1.50 per bottle and coffee at $2.00per 16-ounce cup. Which of the following marginal utility pairs is consistent with Rebecca'sconsumer equilibrium at these prices?a. MU of iced tea = 1; MU of coffee - 1b. MU of iced tea -1; MU of coffee-2c. MU of iced tea -2; MU of coffee = 3d. MU of iced tea = 3; MU of coffee = 4e. MU of iced tea = 4; MU of coffee = 5

The objective of the question is to find the pair of marginal utilities for iced tea and coffee that…

Answered: 6 Rebecca consumes both iced tea and…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 9SQP

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Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
3. Finding the optimal combination of two goods - $2. Suppose that Larry buys Larry enjoys consuming both cheese and fruit. Each pound of cheese costs Pc = $1, and each pound of fruit costs PF 300 pounds of cheese and 200 pounds of fruit per year. The following graphs show his marginal utility curves for cheese and fruit. At his current consumption level, Larry's marginal utility from consuming the last pound of cheese he bought is MUC S 30 utils per pound, and his marginal utility from consuming the last pound of fruit he bought is MUF = 30 utils per pound. 60 40 30 IL 20 10 400 500 600 50 40 A 30 B C D 20 10 0 0 100 Is Larry currently maximizing his utility? Combination 200 300 CHEESE (Pounds per year) 300, 30 (Pounds per Year) 200 400 300 No; he could buy less cheese and more fruit, not spend any more money, and be better off. O No; he likes fruit and cheese more than other goods, so he should buy more of both. O No; he could buy more cheese and less fruit, not spend any more money,…
5. Maximizing Utility when Purchasing Two Goods A consumer has an income of $24. The only two goods the consumer is interested in purchasing are t-shirts and tacos. The marginal-utility schedules for these two goods are shown in the table below. If the price of t-shirts is $8 and the price of tacos is $2, how much of each good should the consumer purchase? Hint: You must calculate the MU/P as the first step in the process. Good A Good B Quantity MU MU/P MU MU/P 1 48 24 2 32 16 3 24 12 4 16 8 5 8 6 6 4 4 1 t-shirt and 3 tacos 2 t-shirts and 4 tacos 3 t-shirts and 5 tacos 4 t-shirts and 6 tacos
Livi consumes both sushi (s) and green tea (t). The following table shows her marginal utility schedule for these two goods (note, MUs = 14 when the quantity increases from 0 to 1, and correspondingly for the other values). The price of sushi is $2 a piece and the price of green tea is $1 a cup. Q MUs MUt MUs/Ps MUt/Pt 1 14 13 ___ ___ 2 12 11 ___ ___ 3 11 10 ___ ___ 4 10 8 ___ ___ 5 9 7 ___ ___ 6 8 6 ___ ___ 7 6 3 ___ ___ 8 4 2 ___ ___ Calculate the MU/P for each good, and fill in the blanks in the table.…

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