Question

Number of ice cream cones B Total Utility from ice cream cones C Marginal Utility from last cone E Number of cans of D Marginal Utility per price M0 . P ps 3.00 Total Utility from Coca Cola G Marginal Utility from last Coca Cola H Marginal Utility per price M.U. Cola Marginal Utility per price MU. Po P $2.00 P P-$1.00 0 36 40 94 90 102 114 105 105 Assume that the price of Ice Cream Cones is $3.00 and the price of cans of Cola is $1.00 per can. 1) Complete columns (C, D, G and H) of the table above. (8 points) 2) If your budget constraint is $14.00, what is the utility maximizing combination of Ice Cream and Cola (4 points) Assume that the price of Ice Cream Cones remains at $3.00 and the price of cans of Cola increases to $2.00 per can. 3) Complete column (1) in the table above. (2 point) 4) Determine the utility maximizing combination of Ice Cream and Cola. (4 points)

Answer 1

D H no. of lee Cream cones Total Utility am Icecream Marginal e from last Mur price No. ofcons of coca Total utility fecom Cola G MU Juan Coca Cola Murprice Cone Touhula NU Cola P=$3 Peacocoa Yütt 36/3= 12 uo To اور دعا و 24 12. 30/3 = to 24/3=8 12/3 ²4 3/3 = 1 073-0 loro sono 9u 40/2=20 30/2 =15 24/2= 12 20/9 - 10 8/2 - 4 105 105 0 122 124 Maximum lltility is obtained can be seen as :options that satuty budget constraint of $14. 2 NO C/ Ice-crean Noel Coca Cola Total till C 1 Possible Utility maximization combinations aue given by: MUSCLIMB MUCnce-cola Pre-cream Poca-Cola (62) 904 122 = 212 1.102+ 10 = 1572 4 2 1.- 2 Cola Units of Ice-cream & 4 Units of give utility - 66+ 114 = 180 1. Utility maximizens cmbination of lea cream and Cola are 3 lee-cream Cones and 5 Coca-Cola." u Units of Ice-cream & 5 give Utility 102+122 Units of Cola = 224 g) Column (I) has been completed above 4) Utility maximizing combination of ice- cream & Cola is given by: 15 Unire of Ice-cream of 6 units of Cola Give Utility = 1084 124 12291 Utility is maximum with s Chite of Ice-cream and 6 Units of Coca-Cola.