ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Have a test and completely lost. One questions but three parts please help
2. Lauren likes the combination of Larry's Pizza and Dr. Pepper (soda) for dinner. When the
price of a soda is $2 per unit and the price of a slice of pizza is $3, Lauren tries to maximize her
satisfaction by consuming various units of soda and pizzas. The table below show you total
utility of soda and pizza at different units.
Table 1. Total Utility (TU) and Marginal Utility (MU) of Pizza and Soda
Unit of Soda
TU (Soda)
MU (Soda)
Unit of Pizza
TU (Pizza)
MU (Pizza)
1
100
1
300
180
540
240
3
720
4
280
4.
840
310
900
6.
900
(1) Fill the two columns of marginal utility (MU) of soda and pizza.
(2) When Lauren maximizes her satisfaction with 4 sodas ($2 each), how many pizzas she should
purchase at $3 each slide?
(3) If the price of pizza increases to $6 per slide, ceteris paribus, how may slides of pizzas should
she purchase to maximize her total satisfaction?
3
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Transcribed Image Text:2. Lauren likes the combination of Larry's Pizza and Dr. Pepper (soda) for dinner. When the price of a soda is $2 per unit and the price of a slice of pizza is $3, Lauren tries to maximize her satisfaction by consuming various units of soda and pizzas. The table below show you total utility of soda and pizza at different units. Table 1. Total Utility (TU) and Marginal Utility (MU) of Pizza and Soda Unit of Soda TU (Soda) MU (Soda) Unit of Pizza TU (Pizza) MU (Pizza) 1 100 1 300 180 540 240 3 720 4 280 4. 840 310 900 6. 900 (1) Fill the two columns of marginal utility (MU) of soda and pizza. (2) When Lauren maximizes her satisfaction with 4 sodas ($2 each), how many pizzas she should purchase at $3 each slide? (3) If the price of pizza increases to $6 per slide, ceteris paribus, how may slides of pizzas should she purchase to maximize her total satisfaction? 3
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