4. Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $18, $6, $4, and $24 and that Ricardo has an income of $106. L07.2 a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.
4. Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $18, $6, $4, and $24 and that Ricardo has an income of $106. L07.2 a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Question 4
Transcribed Image Text:price of lemonade falls, it is as
LO7.4
a. Increases.
b. Decreases.
C. Stays the same
. Suppose that Omar's marginal utility for cups of coffee is con-
the other hand, his marginal utility per doughnut is 10 for the first
doughnut he eats, 9 for the second he eats, 8 for the third he eats,
and so on (that is, declining by 1 util per additional doughnut). In
addition, suppose that coffee costs $1 per cup, doughnuts cost $1
each, and Omar has a budget that he can spend only on dough-
nuts, coffee, or both. How big would that budget have to be before
he would spend a dollar buying a first cup of coffee? LO7.2
4. Columns 1 through 4 in the following table show the marginal
utility, measured in utils, that Ricardo would get by purchasing
various amounts of products A, B, C, and D. Column 5 shows
the marginal utility Ricardo gets from saving. Assume that the
prices of A, B, C, and D are, respectively, $18, $6, $4, and $24
and that Ricardo has an income of $106. L07.2
a. What quantities of A, B, C, and D will Ricardo purchase in
maximizing his utility?
b. How many dollars will Ricardo choose to save?
c. Check your answers by substituting them into the algebraic
statement of the utility-maximizing rule.
Transcribed Image Text:KIOVCHAPTER 7 Utility
COUUGCE
Column 1
Column 2
Column 3
Column 4
Column 5
Units
Units
Units
Units
Number of
of A
MU
of B
MU
of C
MU
of D
MU
Dollars Saved
MU
1
72
1
24
1
15
1
36
1
2
54
2
15
12
30
4
45
12
8
3
24
3.
3.
4
36
4
9
4
7
4
18
4
27
7 5 sO
13
6
18
4
6.
7
7
7
4
8.
12
8.
1 bs 82 21 3
8.
8.
sing between two goods, X and Y, and your mar-
om each is as shown in the following table. If your
nd the prices of X and Y are $2 and $1, respec-
6. ADVANCED ANALYSIS Let MU, = z =
z = 21 - 2y, where z is marginal utility pe
utils, x is the amount spent on product A,
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