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# of Hof Burgers Utility Movies Utility 1 96 1 108 2 186 2 180 3 258 3 246 4 318 4 306 5 366 5 354 6 390 426 7 414
11th Assignment 1. Use the utility table from class. Find the optimal bundle when the price of Burger is $12, the price of Mo
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Answer #1
Q MU/P burger MU /P movies when P=$18 MU/P movies when P=$12
1 - - -
2 90/12=7.5 72/18=4 6
3 72/12=6 66/18=3.6 5.5
4 60/12=5 60/18=3.3 5
5 48/12=4 48/18=2.6 4
6 36/12=3 36/18=2 3
7 24/12=2 24/18=1.3 2

Law of equi Marginal utility states that consumer consumes where MUx/px=MUy/Py and it should satisfy the budget constraint.

a. So, Optimal number of burger=5

Optimal number of movies=2

As at this level MU/P for both goods=4

Also, 5*12+2*18=$96

b. When Price of movies falls to $12

Optimal number of burgers=4

Optimal number of movies=4

As at that level MU/P for both goods=5

also 4*12+4*12=$96

c.

Quantity of Burger .... A 4.- : (BL2 Bli 2 4 0.0% Movies Price Movies 18 - T - Demand curve. -- 2 4 Quantity of movies

d. For Movies,

When P= $18, Q=2

When P=$12, Q=4

Demand equation:

Slope= (12-18)/(4-2)= -3

Intercept= 18-(-3*2)=24

P=-3Q+24

Q= 8-0.3P

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