Question

Total uniity Quantity of Total utility from pens pencilsfrom pencils Quantity of 70 120 150 165 174 176 155 246 41) The table above gives the utility from pens and pencils. lf pens and pencils both cost $.25 each and the consumer has an income of 52.25, which of the following combinations maximizes the consumer's utility? A) 3 pens and 6 penals B)5 pens and 4 pencils C 6 pens and 3 pencils D)4 pens and 5 penails Hours per day Total utility Total utility from friends from breaking some and family 19 24 28 30 28 34 At 37, actor Matthew McConaughey said he only needed "friends and family" to keep him happy and that he avoidesd false drama" at all costs. How did you maintain that bod? "I don't really have a workout regimen I follow. I just live my life. My goal is to break a sweat each day People June 25, 2007 Mt. McConaughey said he only needed friends and family and to break a sweat cach day to keep him happy. The table above shows the total utility he gets from spending time with friends and family and breaking a sweat. 42) Mr. McConaughey has the afternoon, 5 hours, to spend doing whatever he wants. How much time does Mr. McConaughey spend with his friends and family and how much time does he spend breaking a sweat to maximize his total utlity? A) 0 hours with friends and family and 5 hours breaking a sweat B) 3 hours with friends and family and 4 hours breaking a sweat C)2 hours with friends and family and 3 hours breaking a sweat D)3 hours with friends and family and 2 hours breaking a sweat 43) In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases of the good and moves to a_ indifference curve. A) less: lower B) mote, lower C) less, higher Di mone, higher

Answer 1

Quantity of pens	Total utility from pens	Marginal utility	Quantity of pencils	Total utility from pencils	Marginal utility
0	0	-	0	0	-
1	90	90	1	70	70
2	155	65	2	120	50
3	200	45	3	150	30
4	225	25	4	165	15
5	240	15	5	174	9
6	246	6	6	176	2

The marginal utility of 1st unit of pen is greater than the first unit of pencil, so a pen will be bought now

The marginal utility of 1st unit of pencil is greater than the second  unit of pen,so a pencil will be bought now

The marginal utility of 2nd unit of pen is greater than the 2nd unit of pencil, so a pen will be bought now

The marginal utility of 2nd unit of pencil is greater than the 3rd unit of pen, so a pencil will be bought now

The marginal utility of 3rd unit of pen is greater than the 3rd unit of pencil, so a pen will be bought now

The marginal utility of 3rd unit of pencil is greater than the 4th unit of pen, so a pencil will be bought now

The marginal utility of 4th unit of pen is greater than the 4th unit of pencil, so a pen will be bought now

The marginal utility of the 5th unit of pen is equal to the marginal utility of the 4th unit of the pencil, so a pen and a pencil will be bought now.

We can see that with a total of 9 units of pens and pencils altogether, our budget of $2.25 is exhausted and we cannot buy anything more. So in order to maximise utility 5 units of pens and 4 units of pencils are bought. So option B is the correct answer.