Carl's Marginal Utility for Consuming Beer and Pizza with $8.00 Income| Quantity of Hotdogs | Marginal Utility | Quantity of Beer | Marginal Utility ||---------------------|------------------|------------------|------------------|| 1 | 45 | 1 | 40 || 2 | 40 | 2 | 40 || 3 | 30 | 3 | 35 || 4 | 15 | 4 | 10 || 5 | -5 | 5 | 0 |Question:In the above table, how many hotdogs and beers will Carl consume if the price of one hotdog is $2.00 and the price of a beer is $2.00?Choices:- 1 hotdog and 3 beers- 2 hotdogs and 3 beers- 2 hotdogs and 2 beers- 3 hotdogs and 1 beer

Answer: CORRECT OPTION: (option 3) 2 hotdogs and 2 beers Explanation: The consumer will consume that combination where the following condition satisfies: MU of hotdogMU of beer=Price of hotdogPrice of beerMU of hotdogMU of beer=22=1The consumer will consume that combination of two goods which gives equal marginal utility (MU)from both goods2 units of hotdog and 2 units of beer give same marginal utility (40) and the condition will satisfy.4040=221=1 Also, this combination satisfies the budget constraint: Income=Price of hotdog×quantity+Price of beer×quantity8=2×2+2×28=8Answer: option 3

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QUESTION 7 Carl's Marginal Utility for consuming beer and pizza with $8.00 in income Quantity Marginal of Hot dogs Utility 45 Quantity of Marginal Utility Beer 40 40 40 3 30 35 4. 15 4. 10 -5 In the above table, how many hotdogs and beers will Carl consume if the price of one hotdog is $2.00 and the price of a beer is $2.00? O 1 hotdog and 3 beers O 2 hotdogs and 3 beers O 2 hotdogs and 2 beers O 3 hotdogs and 1 beer

QUESTION 7 Carl's Marginal Utility for consuming beer and pizza with $8.00 in income Quantity Marginal of Hot dogs Utility 45 Quantity of Marginal Utility Beer 40 40 40 3 30 35 4. 15 4. 10 -5 In the above table, how many hotdogs and beers will Carl consume if the price of one hotdog is $2.00 and the price of a beer is $2.00? O 1 hotdog and 3 beers O 2 hotdogs and 3 beers O 2 hotdogs and 2 beers O 3 hotdogs and 1 beer

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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