ZuoTi.Pro
Question

Dave currently consumes 10 hotdogs and 6 sodas each week. At his current consumption basket ,...

Dave currently consumes 10 hotdogs and 6 sodas each week. At his current consumption basket , his marginal utility for hot dogs is 5 and his marginal utility for soda is 3. if the price of one hot dog is $1 and the price of one soda is $0.50, is Dave currently maximizing his utility? if not, how should he reallocate his spending in order to increase his utility?

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

At the utility maximization bundle : marginal utility per dollar are equal for each good.

MUD/ PD = 5/1 = 5

MUS/PS =3/0.50 = 6

No , Dave is currently not maximizing his utility .

To maximize his utility , Dave should consume more sodas and fewer hot dogs. As a result of this , marginal utility for sodas decreases and marginal utility for hot dogs increases. And Dave maximize utility at which marginal utility per dollar is equal for both goods.

0 0
Add a comment
Know the answer?
Add Answer to:
Dave currently consumes 10 hotdogs and 6 sodas each week. At his current consumption basket ,...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • At a price of $3 each, Dave (a typical New Yorker) drinks 200 44-ounce sodas each...

    At a price of $3 each, Dave (a typical New Yorker) drinks 200 44-ounce sodas each year. Concerned about burgeoning obesity, the Mayor of New York proposes a $0.50 tax on such drinks. He then proposes compensating consumers for the price increase by mailing each consumer a $100 check each year.    (a) What will happen to Dave’s consumption of soda? Show using an indifference curve diagram with soda on the horizontal axis and a composite good (price = $1)...

  • I can really use the help with this question please. Thank you! * Chris consumes coke...

    I can really use the help with this question please. Thank you! * Chris consumes coke and cookies. The marginal utility of coke at his current consumption level is 12 and the marginal utility of cookies at his current consumption level is 9. The price of coke is $1.00 and the price of cookies is $0.50. Is Chris maximizing his utility? If he is, explain your solution mathematically or by graphing. If he is not maximizing utility, how can Chris...

  • Suppose that at Miles's current level of consumption, his marginal utility from a pizza is 10...

    Suppose that at Miles's current level of consumption, his marginal utility from a pizza is 10 utils, and his marginal utility from a pint of ice cream is 16 utils. If the price of a pizza is $8, and the price of a pint of ice cream is $5, is Miles maximizing his utility? a. Yes. He should not change his spending on frozen pizza and ice cream. b. No. He should shift his spending away from ice cream and...

  • Question 1 Sue is maximizing her utility. Her MU/PX - 10 and Muy -40. Then the...

    Question 1 Sue is maximizing her utility. Her MU/PX - 10 and Muy -40. Then the price of Y must be ОООО Question 2 only m e Ellen is spending her entire income on goods X and Y. Her marginal utility from the last units of X and Y that she consumes is 25. Ellen's the prices of X and Y are the same. the price of good X is twice that of good Y. the price of good Y...

  • 2. Total and marginal utility Yakov enjoys drinking milk, since his mother tells him it will...

    2. Total and marginal utility Yakov enjoys drinking milk, since his mother tells him it will make him grow up strong. The following table contains information on Yakov's utility from milk each day. FW in the two missing cells of the table. Milk (Glasses) Total Utility (Utils) Marginal Utility (Utils per glass) 200 210 On the following graph, use the purple points (diamonds symbol) to plat Yakov's total utility (TU) curve if he consumes zero, one, two, three, four, five,...

  • Question 9 1 pts Logan Roy is spending all his money income by buying mineral water...

    Question 9 1 pts Logan Roy is spending all his money income by buying mineral water and popcorn. At his current consumption level, the marginal utility of mineral water is 70 and the marginal utility of popcorn is 60. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.50. The utility-maximizing rule suggests that Logan should: O Increase consumption of popcorn and increase consumption of mineral water Decrease consumption of...

  • 1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13,...

    1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13, ATC = $15, and MC = $14. In order to maximize profits, this monopolist should A) shut down B) decrease production and increase price. C) not change his output level, because he is currently at the profit-maximizing output level. D) increase production and reduce price. E) there is insufficient information to make a recommendation 2) 2) Consider a monopolist that is able to distinguish...

  • Question 1: A recent study found that the demand and supply schedules for Frisbees are as...

    Question 1: A recent study found that the demand and supply schedules for Frisbees are as follows: Price per Frisbee Quantity Demanded Quantity Supplied $11 1 million 15 million 10 2 12 9 4 9 8 6 6 7 8 3 6 10 1 a) What are the equilibrium price and quantity of Frisbees? b) Frisbees manufacturers persuade the government that Frisbees production improves scientists, understanding of aerodynamics and thus is important for national security. A concerned Parliament votes to...

  • Quick intuition check via True or False Questions 1. 2. If all prices double and income...

    Quick intuition check via True or False Questions 1. 2. If all prices double and income triples, then the budget line will become steeper There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. lf good l is on the horizontal...

  • 1. Consumer’s utility function is: U (X,Y) = 10X + Y. Consumer’s income M is 40...

    1. Consumer’s utility function is: U (X,Y) = 10X + Y. Consumer’s income M is 40 euros, the price per unit of good X (i.e. Px ) is 5 euros and the price per unit of good Y (i.e. Py) is 1 euro. a) What is the marginal utility of good X (MUx) for the consumer? ( Answer: MUx = 10) b) What is the marginal utility of good Y (MUy) for the consumer? ( Answer: MUy = 1) c)...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT