Question

Given this information and the information from the table, the third thing Dino will purchase will be

Dino budgets $12.00 a week for fast food. He enjoys eating cheeseburgers and drinking cola. Initially, each cola costs $2.00 and each cheeseburger costs $3.00. TABLE #1 below illustrates Dino's utility data for consuming cheeseburgers and cola. Find letters A through T and place them in the corresponding boxes in Week Six Big Problem Part One, then use this information to answer the remaining questions in Week Six Big Problem Part One: COLAS MU MU/ $ MU$ A E B F Quantity 0 1 2 3 4 5 6 TU 0 40 70 90 100 106 98 Quantity 0 1 2 3 4 5 CHEESEBURGERS TU MU 0 60 с 90 105 K 114 o 120 S - J D H L P T M N R

Answer 1

Answer:

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COLAS MU MU / $ Quantity MU/ $ 0 Quantity 0 1 2 3 4 5 6 TU 0 40 70 90 A 40 B20 F 15 J 10 NS R 3 1 2 3 CHEESEBURGERS TU MU 0 60 c 60 90 30 105 15 114 9 120 6 D H L E 30 1 | 20 M 10 Q6 U ovom 20 10 5 100 106 98 4 5 ادام 2.

Q 23. Cola

reason: he will buy according to highest values of MU/$. First he will buy a unit each of cola and cheeseburger (20 MU/$ each. Third will be a unit of col (15 MU/$)

Q 24. a cheeseburger or a cola

reason: both carry the same value - 10 Mu/$

Q 25. a cheeseburger or a cola

reason: both carry the same value - 5 Mu/$

Q 26. Dino has maximized his utility, given his budget.

reason: Dino's expenditure on cola = 3 colas * $2 = $6

Dino's expenditure on cheeseburger = 2 * $3 = $6

Total expenditure = $12 (which is equal to his budget of $12.)

Q 27. Diminishing marginal utility or equi-marginal utility; cola = cheeseburgers

reason: Diminishing marginal utility will show his MU that goes on decreasing with consumption of each additional unit.  Equi-marginal utility will show that his last dollar spent on each good will be equal.

Q 28. one cheeseburger and three colas

reason: when price of cheeseburgers increases to $6, his Mu/$ for first unit of cheeseburger is 10. This is ewqual to 3rd unit of cola. He will spend on cheeseburgers = 1 * $6 =$6; and on colas = 3 * $2 = 6.

Q 29. Utility curve (also called indifference curve)

reason: Dino's preference for cheeseburgers, given the price rise will reflect on the utility curve which will now show less quantity of cheeseburgers due to price rise.