Paolo enjoys consuming both soda and coffee. Each can of soda costs Ps = $1, and each cup of coffee costs Pc = $2. Suppose that Paolo buys 30 cans of soda and 20 cups of coffee per week. The following graphs show his marginal utility curves for soda and coffee. At his current consumption level, Paolo's marginal utility from consuming the last can of soda he bought is MUS = 12 utils per can, and his marginal utility from consuming the last cup of coffee he bought is MUC = 12 utils per cup. MU OF SODA (Utils per can) 24 24 20 16 12 0 0 10 20 30 40 50 60 SODA (Cans) ? 24 MU OF COFFEE (Utils per cup) 20 20 16 12 4 0 10 20 30 40 50 60 COFFEE (Cups) ? Is Paolo currently maximizing his utility? No; he could buy more coffee and less soda, not spend any more money, and be better off. No; he likes coffee and soda more than other goods, so he should buy more of both. Yes; the marginal utility he receives from his last can of soda equals that of his last cup of coffee. No; he could buy less coffee and more soda, not spend any more money, and be better off. For each of the following combinations of soda and coffee, calculate the marginal utility per dollar from the last can of soda and the last cup of coffee. Then, use the dropdown menus in the last column to indicate which of the combinations satisfy the condition for consumer equilibrium. Combination (Cans) A 20 B C 40 30 D 50 Soda Coffee MUS (Cups) Ps MUC Pc Consumer Equilibrium? 30 20 30 40 Suppose Paolo has a "caffeine budget" of $130 per week, which he spends on soda and coffee. To maximize his utility, Paolo will purchase cans of soda and cups of coffee per week.
Paolo enjoys consuming both soda and coffee. Each can of soda costs Ps = $1, and each cup of coffee costs Pc = $2. Suppose that Paolo buys 30 cans of soda and 20 cups of coffee per week. The following graphs show his marginal utility curves for soda and coffee. At his current consumption level, Paolo's marginal utility from consuming the last can of soda he bought is MUS = 12 utils per can, and his marginal utility from consuming the last cup of coffee he bought is MUC = 12 utils per cup. MU OF SODA (Utils per can) 24 24 20 16 12 0 0 10 20 30 40 50 60 SODA (Cans) ? 24 MU OF COFFEE (Utils per cup) 20 20 16 12 4 0 10 20 30 40 50 60 COFFEE (Cups) ? Is Paolo currently maximizing his utility? No; he could buy more coffee and less soda, not spend any more money, and be better off. No; he likes coffee and soda more than other goods, so he should buy more of both. Yes; the marginal utility he receives from his last can of soda equals that of his last cup of coffee. No; he could buy less coffee and more soda, not spend any more money, and be better off. For each of the following combinations of soda and coffee, calculate the marginal utility per dollar from the last can of soda and the last cup of coffee. Then, use the dropdown menus in the last column to indicate which of the combinations satisfy the condition for consumer equilibrium. Combination (Cans) A 20 B C 40 30 D 50 Soda Coffee MUS (Cups) Ps MUC Pc Consumer Equilibrium? 30 20 30 40 Suppose Paolo has a "caffeine budget" of $130 per week, which he spends on soda and coffee. To maximize his utility, Paolo will purchase cans of soda and cups of coffee per week.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Paolo enjoys consuming both soda and coffee. Each can of soda costs Ps = $1, and each cup of coffee costs Pc = $2. Suppose that Paolo buys 30
cans of soda and 20 cups of coffee per week. The following graphs show his marginal utility curves for soda and coffee. At his current consumption
level, Paolo's marginal utility from consuming the last can of soda he bought is MUS = 12 utils per can, and his marginal utility from consuming the
last cup of coffee he bought is MUC = 12 utils per cup.
MU OF SODA (Utils per can)
24
24
20
16
12
0
0
10
20
30
40
50
60
SODA (Cans)
?
24
MU OF COFFEE (Utils per cup)
20
20
16
12
4
0
10
20
30
40
50
60
COFFEE (Cups)
?
Transcribed Image Text:Is Paolo currently maximizing his utility?
No; he could buy more coffee and less soda, not spend any more money, and be better off.
No; he likes coffee and soda more than other goods, so he should buy more of both.
Yes; the marginal utility he receives from his last can of soda equals that of his last cup of coffee.
No; he could buy less coffee and more soda, not spend any more money, and be better off.
For each of the following combinations of soda and coffee, calculate the marginal utility per dollar from the last can of soda and the last cup of coffee.
Then, use the dropdown menus in the last column to indicate which of the combinations satisfy the condition for consumer equilibrium.
Combination (Cans)
A
20
B
C
40
30
D
50
Soda
Coffee
MUS
(Cups)
Ps
MUC
Pc
Consumer Equilibrium?
30
20
30
40
Suppose Paolo has a "caffeine budget" of $130 per week, which he spends on soda and coffee. To maximize his utility, Paolo will purchase
cans of soda and
cups of coffee per week.
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