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Is Alyssa currently maximizing her utility? 0 O No; she could buy less fruit and more cheese, not spend any more money, and b4. Finding the optimal combination of two goods Alyssa enjoys consuming both cheese and fruit. Each pound of cheese costs Pc

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Answer #1

1) MCQ

Option A)

At Utility Maximization : MU/P is Equalized across all goods

At current combination

MUC/PC = 12/1 IS NOT EQUAL TO MUf/Pf = 12/2 = 6

& As MUc/Pc > MUf/Pf

So consume more C than F

Combination C MUc/Pc F MUf/Pf consumer eqm
A 20 16 30 5 No
B 40 8 20 6 No
C 30 12 30 5 No
Download 50 4 40 4 yes

Budget : 130

At eqm, MUc/Pc = MUf/Pf

MUc/MUf = Pc/Pf = 1/2

BC: C + 2F = 130

& C/F = 50/40 = 5/4 = 1.25

put, C = 1.25F

3.25F = 130

F* = 40

C* = 50

​​​

Cheese : 50 pound

Fruits : 40 pound

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