*** What are the rest of the MU per Dollar (Pretzels) and MU per Dollar (Eskimo
ID: 1134451 • Letter: #
Question
*** What are the rest of the MU per Dollar (Pretzels) and MU per Dollar (Eskimo Bars) and how do I answer question (ii) ?
Assume Jessica consumes both pretzels and Eskimo Bars.
Quantity of Pretzels
Total Utility (Pretzels)
Marginal Utility from Pretzels (in Utils)
MU per Dollar (Pretzels)
Quantity of Eskimo Bars
Total Utility (Eskimo Bars)
Marginal Utility from Eskimo Bars (in Utils)
MU per Dollar (Eskimo Bars)
0
0
0
0
1
8
8
$4.00
1
10
10
$10.00
2
15
7
2
18
8
3
21
6
3
24
6
4
26
5
4
28
4
5
30
4
5
31
3
6
33
3
6
33
2
(a) The table above shows Jessica’s marginal utility (MU) from consuming two products: pretzels and Eskimo Bars.
(i) What is her total utility from purchasing three (3) Eskimo Bars?
Total utility is 24.
(ii) Jessica’s weekly income is $11, the price of a pretzel is $2, and the price of an Eskimo Bar is $1.
What combination of purchases will maximize Jessica’s utility if she spends her entire weekly
income on pretzels and Eskimo Bars?
Explain your answer using marginal analysis.
Quantity of Pretzels
Total Utility (Pretzels)
Marginal Utility from Pretzels (in Utils)
MU per Dollar (Pretzels)
Quantity of Eskimo Bars
Total Utility (Eskimo Bars)
Marginal Utility from Eskimo Bars (in Utils)
MU per Dollar (Eskimo Bars)
0
0
0
0
1
8
8
$4.00
1
10
10
$10.00
2
15
7
2
18
8
3
21
6
3
24
6
4
26
5
4
28
4
5
30
4
5
31
3
6
33
3
6
33
2
Explanation / Answer
Quantity of Pretzels Total Utility (Pretzels) Marginal Utility from Pretzels (in Utils) MU per Dollar (Pretzels) Quantity of Eskimo Bars Total Utility (Eskimo Bars) Marginal Utility from Eskimo Bars (in Utils) MU per Dollar (Eskimo Bars) 0 0 0 0 1 8 8 $4.00 1 10 10 $10.00 2 15 7 $3.50 2 18 8 $8.00 3 21 6 $3.00 3 24 6 $6.00 4 26 5 $2.50 4 28 4 $4.00 5 30 4 $2.00 5 31 3 $3.00 6 33 3 $1.50 6 33 2 $2.00 Consumer will consume Eskimo Bar till (MU/Price)Eskimo > (MU/Price)Pretzel For first four unit of Eskimo bar (MU/Price)Eskimo > (MU/Price)Pretzel Therefore he will buy 5 units of eskimo bar and 3 unit od pretzel given his income = $11.
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