Question

et5BN> 970 1 12 CENGAGE I MINDTAP lasses of mik and 20 glasses of juice per week. The following graphs show her marginal utility arves for milk and juce. At her current consumption 12 -=- -0 20 30 40 60 eo 102030405000 8 JUICE (Glasses) ° Type here to search CENGAGE | MINDTAP k (Ch 21) O No; he likes fruit and cheese more than other goods, so he should buy more of both O No; he could buy less fruit and more cheese, not spend any more money, and be better of. O No; he could buy more fruit and less cheese, not spend any more money, and be better off. fruit. Then, use the dropdown menus in the last column to indicate which of the combinations satisfy the condition for consumer equilibrium. Fruit Combination (Pounds) (Pounds) Consumer Equilibrium? Ft 100 125 100 Suppose Charles has an appetizer budget of $395 per month, which he spends on cheese and fruit. To maximize his utility, Charles will burchase pounds of cheese and O Type here to search 0

Answer 1

At utility maximization bundle : Marginal utility per dollar for both goods are equal.

At the current bundle : MUm/Pm = 12/1 = 12

And MUj/ Pj = 12/2= 6

Because MU/P is not equal for both goods . This implies that No, Anny is currently not maximizing her utility, she could buy less juice and more milk , not spend any more money and be better off. Because we can see at the current bundle MUm/Pm > MUj/Pj , so if Neha consumes more of milk and less juice , MUm start decreasing and MUj start increasing and she will reach at the utility maximizing bundle where MUm/Pm = MUj/Pj

Combination	Milk (Glasses per week)	MUm/Pm = MUm/$1	Juice (Glasses per week)	MUj/Pj = MUj/$2	Consumer equilibrium
A	20	16/1=16	30	10/2= 5	FALSE
B	40	8/1= 8	20	12/2=6	FALSE
C	30	12/1=12	30	10/2=5	FALSE
D	50	4/1=4	40	8/2=4	TRUE

Suppose Anny has a "budget" of $165 per week, which she spends on milk and juice . To maximize her utility , Anny will purchase 50 glasses of milk and 40 glasses of juice per week.