:Short Answer Economic ( x (4 unre ces . 10 ×?G i middle east oil . Google x e w

Question

:Short Answer Economic ( x (4 unre ces . 10 ×?G i middle east oil . Google x e w price of oil-Wikipedia e.com/courses/18320/quizzes/76752/take × e more than one answer is correct Question 10 1 pt The marginal utility from the first three bananas consumed are: 19, 15, and 5 respectively. The marginal utility from the first three pizza slices are: 48, 33, and 3 respectively. The marginal utility from the first three pairs of cheap sandals is 120, 30, and 6. Each banana costs $1, pizza costs $3 per slice, and a pair of sandals cost $6. You have $6 in your budget. How do you maximize your utility? 1 pair of sandals 3 bananas, 1 pizza slice 3 pizza slices 3 pairs of sandals 2 pizza slices O No new data to save. Last checked at 11:11pm Submit Quiz IMG 0926JPG ?anes pic.html Ae (4 unread) - ericb.htm

Explanation / Answer

Banana (Price $1)

Pizza (Price $3)

Cheap Sandals (Price $6)

Units

MU

MU/Price

Units

MU

MU/Price

Units

MU

MU/Price

1

19

19

1

48

16

1

120

20

2

15

15

2

33

11

2

30

5

3

5

5

3

3

1

3

6

1

Income of the consumer = $6

Let’s take the options of the question to decide which option is maximize the Total Utility

Option

Combination

Expenditure

Total Utility

1

1 sandal

1x$6 = $6

120

Attainable

2

3 banana + 1 pizza

3x$1 + 1x$3 = $6

(19+15+5) + (48)= 87

Attainable

3

3 pizza

3x$3 = $9

Not Attainable

4

3 sandals

3x$6 = $18

Not Attainable

5

2 pizzas

2x$3 = $6

48+33 = 81

Attainable

From the above we can see that the consumer is getting maximum total utility in the first option.

Hence, utility maximizing combination should be one unit of sandals because at this

Combination only the consumer gets maximum utility.

Answer – One pair of sandals

Banana (Price $1)

Pizza (Price $3)

Cheap Sandals (Price $6)

Units

MU

MU/Price

Units

MU

MU/Price

Units

MU

MU/Price

1

19

19

1

48

16

1

120

20

2

15

15

2

33

11

2

30

5

3

5

5

3

3

1

3

6

1

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