Rudolph has a budget of $30 to spend on rice ( R) and chicken nuggets ( M). The price of rice is $1.76 per pound, and the price of chicken nuggets is $14.12 per unit. The table below shows the marginal utilities that theconsumer gets from the different quantities of both.MURMUN181616141412412101086876482910What is the optimal bundle of rice and chicken nuggets ( QR. QN) for Rudolph? (QR. QN) =O A. (8, 2)O B. (10, 1)O C.(2, 0)O D. (10, 2)O E. (9, 1)

We have given that price of rice (R) is $1.79 per pound Price of Chicken nuggets(N) is $14.12 per unit. Total budget m= $30 Q MUR MUN 1 18 16 2 16 14 3 14 12 4 12 10 5 10 8 6 8 6 7 6 4 8 4 2 9 2 0 10 0 0 We will calculate marginal utility per unit price for each unit of goods. Q MUR MUN MUR/1.76 MUN/14.12 1 18 16 10.227 1.133 2 16 14 9.091 0.992 3 14 12 7.955 0.85 4 12 10 6.818 0.708 5 10 8 5.682 0.567 6 8 6 4.545 0.425 7 6 4 3.409 0.283 8 4 2 2.273 0.142 9 2 0 1.13 0 10 0 0 0 0Condition of utility maximization: MURPR=MUNPNputting value MUR1.76=MUN14.12 This condition hold at QR=9 and QN=1 Now we will check that the consumption bundle (QR=9 ,QN=1) satisfy the budget or not. Budget equation is given by 1.76QR+14.12QN=m Substitute QR=9 and QN=1 1.76×9+14.12=29.9=~30 So optimal bundle is QR=9 and QN=1

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pound, and the price of chicken nuggets budget of $3 onsumer gets from the different quantities of both. cudolph spend on rice( and chicken nuggets ( N). The price table below shows the marginal utilities thai MUR MUN 1 18 16 16 14 14 12 4. 12 10 5 10 8 6 8 6 6 8 2 9 10 Vhat is the optimal bundle of rice and chicken nuggets ( QR. QN) for Rudolph? (QR. QN) = OA. (8, 2) O B. (10, 1) O C. (2, 0) O D. (10, 2) O E. (9, 1)

pound, and the price of chicken nuggets budget of $3 onsumer gets from the different quantities of both. cudolph spend on rice( and chicken nuggets ( N). The price table below shows the marginal utilities thai MUR MUN 1 18 16 16 14 14 12 4. 12 10 5 10 8 6 8 6 6 8 2 9 10 Vhat is the optimal bundle of rice and chicken nuggets ( QR. QN) for Rudolph? (QR. QN) = OA. (8, 2) O B. (10, 1) O C. (2, 0) O D. (10, 2) O E. (9, 1)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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