The following table displays George%u2019s consumption of soda pop and pretzels.
ID: 1177279 • Letter: T
Question
The following table displays George%u2019s consumption of soda pop and pretzels. The price of each soda pop is $2.00 and the price of each pretzel is $5.00. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
A. Fill in the missing total utility, marginal utility, and marginal utility/price (MU/Price). Place the final answer for each in the correct shaded area within the table below.
Bottles of Soda Pop
Number of Pretzels
Bottles of Soda Pop Consumed
Total Utility
Marginal Utility
MU/Price
Number of Pretzels Consumed
Total Utility
Marginal Utility
MU/Price
0
0
0
0
1
20
2
50
2
18
4
20
3
14
6
120
15
4
60
8
8
140
5
64
10
150
5
6
62
12
0
B. George has $28.00 to spend on soda pop and pretzels. Determine the number of cans of soda pop and pretzels that will be optimal for George. Explain your reasoning regarding how you chose that consumption point. Submitting only a final answer will not earn credit.
Please show calculations to receive total points.
Explanation / Answer
Bottles of Soda Pop Consumed Total Utility Marginal Utility MU/Price
0 0 __0_ __0_
1 20 _20__ _10__
2 _38_ 18 _9__
3 _52__ 14 __7__
4 60 8 __4__
5 64 _4__ __2__
6 62 __-2__ _-1___
Number of Pretzels Consumed Total Utility Marginal Utility MU/Price
0 0 _0___ __0__
2 50 _50___ __10___
4 _100___ 20 __4__
6 120 15 ___3__
8 140 _20__ __4____
10 150 5 ____1___
12 _150___ 0 __0_____
B.
George can buy 28/2=14 soda
or
28/5=5.6 pretzel
2S+5P=28 budget constraint
and
MU of soda/pretzel=14/5.6
=2.5
Therefore, for every pretzel consumer, 2.5 sodas are consumed
or
1P=2.5S
substitute this into our equation
2S+5P=28
2S+5(2.5S)=28
2S+12.5S=28
14.5S=28
S=28/14.5 or 56/29
plug this into equation
2(56/29)+5P=28
112/29+5P=28
5P=700/29
P=35000/29
Hope this helps
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