For part b, is the utility received just the MU/P of 5 books and 1 pizza added up? **Transcription for Educational Website:**---2. The table below presents Kent’s marginal utility per dollar for books and pizzas. Books cost $16 each and pizzas cost $8 each.| Books | MU/P | Pizzas | MU/P ||-------|-------|--------|-------|| 1 | 30 | 1 | 25 || 2 | 26 | 2 | 24.5 || 3 | 24.5 | 3 | 20 || 4 | 20 | 4 | 16 || 5 | 17.5 | 5 | 11 || 6 | 10 | 6 | 8 || 7 | 5.5 | | |**Questions:**a. How many books and pizzas will Kent purchase if he has $88 to spend?b. How much utility will Kent receive from his purchases in a?c. The price of books rises to $20 a book. How do your answers to a and b change?---**Explanation:**The table provides the marginal utility per dollar (MU/P) for books and pizzas. Marginal utility per dollar is a measure of the additional satisfaction or utility gained from spending one more dollar on the good. - Kent must consider the MU/P values to maximize his utility with a budget of $88.- As prices change, as in question c, the strategy to maximize utility would also change based on these MU/P values.**Note:** This scenario requires calculating the optimal combination of books and pizzas Kent will purchase within his budget constraints to maximize his utility.

Law of Equi -Marginal utility: It is the Law that states that ratio of the marginal utility to the…

2. The table below presents Kent's marginal utility per dollar for books and pizzas. Books cost $16 each and pizzas cost $8 each. Books MU/P Pizzas MU/P 1 30 1 25 26 24.5 3 24.5 3 20 4 20 4 16 17.5 11 10 8 5.5 7 2 a. How many books and pizzas will Kent purchase if he has $88 to spend? b. How much utility will Kent receive from his purchases in a? c. The price of books rises to $20 a book. How do your answers to a and b change?

2. The table below presents Kent's marginal utility per dollar for books and pizzas. Books cost $16 each and pizzas cost $8 each. Books MU/P Pizzas MU/P 1 30 1 25 26 24.5 3 24.5 3 20 4 20 4 16 17.5 11 10 8 5.5 7 2 a. How many books and pizzas will Kent purchase if he has $88 to spend? b. How much utility will Kent receive from his purchases in a? c. The price of books rises to $20 a book. How do your answers to a and b change?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

For part b, is the utility received just the MU/P of 5 books and 1 pizza added up?

**Transcription for Educational Website:**

---

2. The table below presents Kent’s marginal utility per dollar for books and pizzas. Books cost $16 each and pizzas cost $8 each.

| Books | MU/P | Pizzas | MU/P |
|-------|-------|--------|-------|
| 1 | 30 | 1 | 25 |
| 2 | 26 | 2 | 24.5 |
| 3 | 24.5 | 3 | 20 |
| 4 | 20 | 4 | 16 |
| 5 | 17.5 | 5 | 11 |
| 6 | 10 | 6 | 8 |
| 7 | 5.5 | | |

**Questions:**

a. How many books and pizzas will Kent purchase if he has $88 to spend?

b. How much utility will Kent receive from his purchases in a?

c. The price of books rises to $20 a book. How do your answers to a and b change?

---

**Explanation:**

The table provides the marginal utility per dollar (MU/P) for books and pizzas. Marginal utility per dollar is a measure of the additional satisfaction or utility gained from spending one more dollar on the good.

- Kent must consider the MU/P values to maximize his utility with a budget of $88.
- As prices change, as in question c, the strategy to maximize utility would also change based on these MU/P values.

**Note:** This scenario requires calculating the optimal combination of books and pizzas Kent will purchase within his budget constraints to maximize his utility.

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