a. Suppose Pepsi costs $.50 per can, pizza costs $1 per slice, and Anita has $9 to spend on food and drink. What combination of pizza and Pepsi will maximize her utility? b. If MU/P-8 for pizza and the MU/P = 5 for Pepsi, is Anita maximizing her utility? If not, what should she do to maximize her utility
a. Suppose Pepsi costs $.50 per can, pizza costs $1 per slice, and Anita has $9 to spend on food and drink. What combination of pizza and Pepsi will maximize her utility? b. If MU/P-8 for pizza and the MU/P = 5 for Pepsi, is Anita maximizing her utility? If not, what should she do to maximize her utility
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:1. Anita consumes both pizza and Pepsi. The following tables show the amount of
utility she obtains from different amounts of these two goods:
Cans of Pepsi
5
6
7
8
Slices of
Pizza
4
5
6
7
Utility from
pizza
115
135
154
171
Utility from
Pepsi
63
75
86
96
a. Suppose Pepsi costs $.50 per can, pizza costs $1 per slice, and Anita has $9 to
spend on food and drink. What combination of pizza and Pepsi will maximize her
utility?
b. If MU/P-8 for pizza and the MU/P= 5 for Pepsi, is Anita maximizing her utility?
If not, what should she do to maximize her utility
2. For each of the following, determine if the consumer is at a tangency point. If not,
will the consumer prefer a market basket on the budget line with more X or more Y?
MRS 10 and Px/Py=5
a.
b.
MRS= 5 and Px/Py=5
c. MRS 3 and Px/Py=5
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