Homework: Homework 5 Score: 0 of 2 pts Concept: Equal MU per Dollar 1 HW Score:

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Homework: Homework 5 Score: 0 of 2 pts Concept: Equal MU per Dollar 1 HW Score: 46 67%, 14 of 30 pts Question Help * from consuming slices of pizza and cans of Coke Utili from Pizza from Last Slice Coke from Coke from Last Can Pizza 75 108 120 126 100 105 Suppose William has $4.00 per week to spend on pizza and Coke The price of a slice of pizza is $1.00 and the price of a can of Coke is s0 4o If Willim wants to maximize his utilly, he should buyslices) of pizza and ] can(a) of Coke Enter your answer in the edit fields and then click check Answer Clear All

Explanation / Answer

If William wants to maximize his utility he should buy 2 slices of pizza and 4 cans of coke.

At utility maximisation, marginal utility of good 1 / Price of good 1 = marginal utility of good 2/ Price of good 2

So 30/1 = 15/0.50 = 30 and the choice also satisfies the budget constraint. Quantity of pizza * price of pizza + quantity of coke cans* price of cans = income

2 *1 + 4 *0.50 = 4

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