Question

can somebody help me to check if Im correct number 30&31? and I got stuck number 32

Take Test: Midterm Exam QUESTION 30 A consumer is maximizing their utility and consumes both hamburgers and fries. The price of hamburgers exceeds that of fries. Which of the following statements necessary must be correct? The MU from hamburgers exceeds the MU from fries The MU from fries exceeds the Mu from hamburgers The total utility from fries exceeds the total utility from hamburgers. The total collity from hamburgers exceeds the total utility from fries. 2.5 points Saved QUESTION 31 Moses marginal utilities for milk and honey is given in the table below. The price of milk is 52 and the price of honey is 14. If Mose's income is 516, how much milk and how much honey does he buy to maximize his utility? OMILK MUMILK QHONEY MUHONEY 1 32 1 2 28 40 3 24 3 36 2 4 20 4 32 5 16 5 28 6 12 6 2 8 20 8 4 8 16 1 milk and 1 honey 4 milks and 2 honey 5 mills and 4 honeys 6 milk and honeys 2.5 points QUESTION 32 A consumer is in equilibrium when all income is spent and consumption of good X equals consumption of good Y MUX/PX MUY/Py what is spent on good X equals what is spent on good Y None of the above

Answer 1

Answer:

30. Mu from fries exceeds MU from hamburgers.

reason: We know that MU of fries = Price of hamburgers. and MU of hamburgers = Price of fries. So if price of hamburgers exceeds the price of fries, then the MU of fries exceeds the MU of hamburgers.

31. 4 milks and 2 honey.

reason: To find the equilibrium of consumption, we need to find the MU per dollar of milk and honey. We can do this by dividing MU by the price. MU per dollar of first 5 units of milk is, 16, 14, 12, 10, 8. MU per dollar of first 4 units of honey is 11, 10, 9, 8, 7. Moses has $16. He will buy milk and honey in the order of highest utility. That is 1st, 2nd, 3rd, units of milk, + first unit of honey + 4th unit of milk + 2nd unit of honey. Thus he will buy 4 units of milk and 2 units of honey.

32. MUx/Px= MUy/Py.

reason: MU/P gives the per dollar utility of a good. If a consumer is consuming two goods, x and y, both having different prices, they can be equated by equating their Marginal utility (MU). This can be done by dividing MU by its price. So, once we derive equi-marginal utility, the consumer can spend all his income on the 2 goods in such a way that the utility derived from his last dollar on each good is equal. In other words, MUx/Px = MUy/Py.