b) Diana has $6.00 to spend. She has the option to buy two goods: sandwiches and peppermints. Sandwiches cost $3.00 each, and peppermints cost $1.00 per pack. The table below shows the utility Diana derives from consuming sandwiches or peppermints at various levels of consumption. i. In the table below, compute and complete the table below for the marginal utility per dollar for each level of consumption. Sandwiches Marginal utility / Marginal S (price per each) Utility 15 Peppermints Marginal Utility $ (price per each) Units Marginal Utility purchased 1 2 3 3 4 4 n/a 5 n/a 1 ii. Briefly explain how Diana should spend the first $3.00.
b) Diana has $6.00 to spend. She has the option to buy two goods: sandwiches and peppermints. Sandwiches cost $3.00 each, and peppermints cost $1.00 per pack. The table below shows the utility Diana derives from consuming sandwiches or peppermints at various levels of consumption. i. In the table below, compute and complete the table below for the marginal utility per dollar for each level of consumption. Sandwiches Marginal utility / Marginal S (price per each) Utility 15 Peppermints Marginal Utility $ (price per each) Units Marginal Utility purchased 1 2 3 3 4 4 n/a 5 n/a 1 ii. Briefly explain how Diana should spend the first $3.00.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 3SQP
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Transcribed Image Text:b) Diana has $6.00 to spend. She has the option to buy two goods: sandwiches and
peppermints. Sandwiches cost $3.00 each, and peppermints cost $1.00 per pack. The table
below shows the utility Diana derives from consuming sandwiches or peppermints at
various levels of consumption.
In the table below, compute and complete the table below for the marginal utility per
dollar for each level of consumption.
i.
Peppermints
Marginal Utility/
$ (price per each)
Sandwiches
Marginal
Utility
Marginal utility/
$ (price per each)
Marginal
Utility
Units
purchased
1
9
15
9
3
4
4
n/a
n/a
1
ii.
Briefly explain how Diana should spend the first $3.00.
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