Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
Question
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Chapter 19, Problem 6QE

a)

To determine

The utility maximizing combination of Goods A, B, and C.

b)

To determine

The changes in the consumption due to an increase in price of Good B from $1 to $2.

c)

To determine

The changes in the consumption due to an increase in price of B from $1 to $2.

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Suppose utility can be measured by "utils" and that Jim buys both coffee and bagels. The price of coffee is $2 and the price of a bagel is $3. If Jim is currently consuming coffee and bagels such that the marginal utility from the last cup of coffee consumed was 6 utils and the marginal utility from the last bagel consumed was 12 utils, is Jim maximizing utility? Why or why not? If not, what should Jim do? Explain in detail.
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