### Problem 34: Consumer Choice OptimizationConsider Dianna, who has a $25 fast-food budget per month. She can purchase salads (S), hamburgers (H), or chicken strips (C). The prices are as follows:- Salad: $ P_S = $3 $- Hamburger: $ P_B = $2 $- Chicken Strips: $ P_C = $4 $To find the optimal combination of goods Dianna should purchase, consider the following table where:- **MU**: Marginal Utility- **MU/P**: Marginal Utility per Dollar Spent| # Salads | MU Salads | MU/P Salads | # Hamburgers | MU Hamburgers | MU/P Hamburgers | # Chicken Strips | MU Chicken Strips | MU/P Chicken Strips ||----------|-----------|-------------|--------------|---------------|----------------|------------------|-------------------|---------------------|| 1 | 54 | 18 | 1 | 34 | 17 | 1 | 72 | 18 || 2 | 48 | 16 | 2 | 28 | 14 | 2 | 64 | 16 || 3 | 42 | 14 | 3 | 22 | 11 | 3 | 56 | 14 || 4 | 36 | 12 | 4 | 16 | 8 | 4 | 48 | 12 || 5 | 30 | 10 | 5 | 10 | 5 | 5 | 40 | 10 |#### Questions1. **In the optimal consumption bundle for Dianna, she will purchase how many salads, hamburgers, and chicken strips?** - a) 2; 1; 2 - b) 3; 2; 3 - c) 4; 3; 4 - d) 5; 4; 52. **Dianna’s utility is maximized where the marginal utility per dollar spent on each item is equal to _______.** - a) $10 - b) $12 - c)

The marginal utility table is given below SaladsMU SaladsMU/P SaladsHamburgersMU HamburgersMU/P…

34) Consider Dianna who has a $25 fast food budget per month. She can purchase salads (S), hamburgers (H), or chicken strips (C). The price of a salad is Ps=$3, the price of a hamburger is PB-$2 and the price of chicken strips is Pc $4. Fill in the table below. You will use your solutions to answer questions 34-36. # Salads 1 2 3 4 5 MU Salads b) 3; 2; 3 c) 4; 3; 4 d) 5; 4; 5 54 48 42 36 30 b) $12 c) $14 d) $16 MU/P Salads # Hamburgers 1 2 3 4 5 MU hamburgers In the optimal consumption bundle for Dianna, she will purchase chicken strips. a) 2; 1; 2 34 28 22 16 10 36) Dianna total utility from her consumption bundle is a) 126 b) 504 c) 106 d) 398 MU/P # Hamburgers Chicken Strips 1 2 7 salads, 3 4 5 MU Chicken 35) Dianna's utility is maximized where the marginal utility per dollar spent on each item is equal to a) $10 Strips 72 MU/P Chicken Strips 64 56 48 40 hamburgers, and

34) Consider Dianna who has a $25 fast food budget per month. She can purchase salads (S), hamburgers (H), or chicken strips (C). The price of a salad is Ps=$3, the price of a hamburger is PB-$2 and the price of chicken strips is Pc $4. Fill in the table below. You will use your solutions to answer questions 34-36. # Salads 1 2 3 4 5 MU Salads b) 3; 2; 3 c) 4; 3; 4 d) 5; 4; 5 54 48 42 36 30 b) $12 c) $14 d) $16 MU/P Salads # Hamburgers 1 2 3 4 5 MU hamburgers In the optimal consumption bundle for Dianna, she will purchase chicken strips. a) 2; 1; 2 34 28 22 16 10 36) Dianna total utility from her consumption bundle is a) 126 b) 504 c) 106 d) 398 MU/P # Hamburgers Chicken Strips 1 2 7 salads, 3 4 5 MU Chicken 35) Dianna's utility is maximized where the marginal utility per dollar spent on each item is equal to a) $10 Strips 72 MU/P Chicken Strips 64 56 48 40 hamburgers, and

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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