Dali enjoys cool drink (c) and steak (s) for lunch. His monthly lunch budget is R600. His total utility schedule is shown in the table below. Which quantities of beer and steak will he consume at consumer equilibrium?

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**Determining Consumer Equilibrium for Lunch Choices**

**Scenario:**
Dali enjoys both cool drinks (c) and steaks (s) for lunch. He has allocated a monthly lunch budget of R600. His total utility schedule for these items is tabulated below. The question is to determine which quantities of cool drinks and steaks he will consume at consumer equilibrium given the information in the table.

**Table of Total Utilities:**

|                      | Cool Drink | Steak |
|----------------------|------------|-------|
| **Price**            | R30        | R40   |
| **Quantity (Q)**     | **TUc**    | **Tus**|
| 5                    | 269        | 491   |
| 6                    | 279        | 511   |
| 7                    | 285        | 523   |
| 8                    | 288        | 530   |
| 9                    | 289        | 534   |
| 10                   | 289        | 536   |

**Available Options:**

a. 10 cool drinks and 9 steaks

b. 9 cool drinks and 8 steaks

c. 10 cool drinks and 10 steaks

**Analysis:**
To determine Dali’s consumption at consumer equilibrium, the marginal utility per Rand should be equalized for both goods. This can be found by calculating the marginal utility (MU) of each additional unit of the good and dividing it by the price of the good.

**Marginal Utility per Rand (MU/Price):**

Marginal Utility (MU) = Increase in Total Utility (TU) / Increase in Quantity (Q)

1. Calculate the marginal utilities for both cool drinks and steaks based on the change in total utility.
2. Divide the marginal utility by the price of the respective goods to find the MU per Rand.
3. Equate the MU per Rand for both cool drinks and steaks to determine the quantities that equalize the MU per Rand within the given budget constraint.

**Conclusion:**
After performing these calculations and matching them against Dali’s budget, the correct option can be derived. Make sure to show all calculation steps to achieve the final quantities.
Transcribed Image Text:**Determining Consumer Equilibrium for Lunch Choices** **Scenario:** Dali enjoys both cool drinks (c) and steaks (s) for lunch. He has allocated a monthly lunch budget of R600. His total utility schedule for these items is tabulated below. The question is to determine which quantities of cool drinks and steaks he will consume at consumer equilibrium given the information in the table. **Table of Total Utilities:** | | Cool Drink | Steak | |----------------------|------------|-------| | **Price** | R30 | R40 | | **Quantity (Q)** | **TUc** | **Tus**| | 5 | 269 | 491 | | 6 | 279 | 511 | | 7 | 285 | 523 | | 8 | 288 | 530 | | 9 | 289 | 534 | | 10 | 289 | 536 | **Available Options:** a. 10 cool drinks and 9 steaks b. 9 cool drinks and 8 steaks c. 10 cool drinks and 10 steaks **Analysis:** To determine Dali’s consumption at consumer equilibrium, the marginal utility per Rand should be equalized for both goods. This can be found by calculating the marginal utility (MU) of each additional unit of the good and dividing it by the price of the good. **Marginal Utility per Rand (MU/Price):** Marginal Utility (MU) = Increase in Total Utility (TU) / Increase in Quantity (Q) 1. Calculate the marginal utilities for both cool drinks and steaks based on the change in total utility. 2. Divide the marginal utility by the price of the respective goods to find the MU per Rand. 3. Equate the MU per Rand for both cool drinks and steaks to determine the quantities that equalize the MU per Rand within the given budget constraint. **Conclusion:** After performing these calculations and matching them against Dali’s budget, the correct option can be derived. Make sure to show all calculation steps to achieve the final quantities.
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