Assume that Abdullah has RO 44 to spend on Energy drinks and Protein Bars each month and that both goods must be purchased whole (no fractional units). Energy drinks cost RO 8 and Protein Bars cost RO 3 each. Abdullah’s preferences for Energy drinks and Protein Bars are summarized by the following information:Energy drinksProtein BarsNo. per MonthTUMUMU/PxNo. per MonthTUMUMU/Py142 118 278 233 3108 345 4132 454 5150 560 6162 663 7168 766 Fill in the figures for marginal utility and marginal utility per dollar both Energy drinks and Protein Bars.Are these preferences consistent with the law of diminishing marginal utility? Explain briefly.Given the budget of RO 22, what quantity of Protein Bars and what quantity of Energy drinks will maximize Joe’s level of satisfaction?

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Answered: Assume that Abdullah has RO 44 to spend…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that Abdullah has RO 44 to spend on Energy drinks and Protein Bars each month and that both goods must be purchased whole (no fractional units). Energy drinks cost RO 8 and Protein Bars cost RO 3 each. Abdullah’s preferences for Energy drinks and Protein Bars are summarized by the following information:

Energy drinks	Protein Bars
No. per Month	TU	MU	MU/P_x	No. per Month	TU	MU	MU/P_y
1	42			1	18
2	78			2	33
3	108			3	45
4	132			4	54
5	150			5	60
6	162			6	63
7	168			7	66

Fill in the figures for marginal utility and marginal utility per dollar both Energy drinks and Protein Bars.
Are these preferences consistent with the law of diminishing marginal utility? Explain briefly.
Given the budget of RO 22, what quantity of Protein Bars and what quantity of Energy drinks will maximize Joe’s level of satisfaction?

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