Question

Number of Cookies Total Utility Marginal Utility Number of Pretzels Total Utility Marginal Utility 30 30 Hide commants V

Answer 1

2)

Cookies	MU	MU/P	Pretzels	MU	MU/P
0	0		0	0
1	25	25	1	10	10
2	15	15	2	8	8
3	10	10	3	6	6
4	5	5	4	4	4
5	0	0	5	2	2
6	-5	-5	6	0	0

The utility-maximizing combination is

4 units of each good

Total utility = 55+28 = 83

3) When the price of cookies increases to 1.5

Cookies	MU	MU/P	Pretzels	MU	MU/P
0	0		0	0
1	25	16.67	1	10	10
2	15	10	2	8	8
3	10	6.67	3	6	6
4	5	3.33	4	4	4
5	0	0	5	2	2
6	-5	-3.33	6	0	0

The new utility-maximizing combination is

3 units of each good

Total utility = 50+24 = 74