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2, Ali has a $7 weekly budget that he spends on songs (S, $1 per download) and protein bars (B, $1 per bar). His utility information for the two products is below. Quantity ofTotal utility Marginal utility Quantity ofTotal utility Marginal utility rotein bars 0 from bars 0 songs from songs of a song of a bar 107 18 24 28 30 31 2 3 4 18-9 21-12 23- 24 20 7-3 4 a) Calculate Alis marginal utilities and finish the filling out the table. b) If Ali spends his entire budget on songs, he could buysongs; and he spends his entire budget on protein bars, he could buy 7bars c) Plot Alis budget line on the graph below. Make sure to indicate the maximum amounts of goods. d) What is the slope of the budget line? 71 1
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What will be his new optimal bundle? label it 2 What is the ratio of marginal utilities at this bundle? of the budget line? Indicate the new optimal bundle on the graph above and Does its numerical value equal to the slope j) The following week Alis budget was back to normal $7. But his favorite songs went on sale for $0.50 a download. Will Ali buy more songs? Calculate his total utility, and shade-in the cells that consumer can afford: total Utility Bars 0 2 4 Songs 0 4 6 What bundle will Ali choose given his $7 budget in order to maximize utility?
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