Answered: marginal utility

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. In taking an exam, Atack, a rational student, allocates his time to the various questions so as to equalize his
marginal point utility per minute on all questions.

2. The marginal utility of food to Zecher depends only on the amount of food (and not on the amount of
housing) and the marginal utility declines as more food is consumed; likewise for housing. Therefore,
both food and housing are normal goods. (Hint: Express the optimality condition for Zecher’s [UMP], MU_F/MU_H = P_F/P_H. Notice that P_F/P_H is fixed. If all of an increase in income is spent on F, can the equality be maintained?)

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