Kelly spends all of her $24 of weekly income on Girl Scout cookies and doughnuts. The...
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Kelly spends all of her $24 of weekly income on Girl Scout cookies and doughnuts. The table below shows the utility she receives from different combinations of cookies and doughnuts. Each box of cookies she buys is $5, and each doughnut she buys is $1. If the price of cookies increases to $10 per box, what combination of cookies and doughnuts now maximizes Kelly's utility given her limited budget? Quantity of cookies (boxes per week) 1 2 3 4 5 6 Total utility from cookies 400 760 1,080 1,360 1,620 1,780 Marginal utility of cookies 400 360 320 280 260 160 MU per dollar spent on cookies 40 36 32 28 26 16 Quantity of doughnuts (doughnuts per week) 1 2 3 co 4 5 6 Total utility Marginal from doughnuts doughnuts utility from 200 375 525 595 620 628 200 175 150 70 25 8 MU per dollar spent on doughnuts 200 175 150 70 25 8 Kelly spends all of her $24 of weekly income on Girl Scout cookies and doughnuts. The table below shows the utility she receives from different combinations of cookies and doughnuts. Each box of cookies she buys is $5, and each doughnut she buys is $1. If the price of cookies increases to $10 per box, what combination of cookies and doughnuts now maximizes Kelly's utility given her limited budget? Quantity of cookies (boxes per week) 1 2 3 4 5 6 Total utility from cookies 400 760 1,080 1,360 1,620 1,780 Marginal utility of cookies 400 360 320 280 260 160 MU per dollar spent on cookies 40 36 32 28 26 16 Quantity of doughnuts (doughnuts per week) 1 2 3 co 4 5 6 Total utility Marginal from doughnuts doughnuts utility from 200 375 525 595 620 628 200 175 150 70 25 8 MU per dollar spent on doughnuts 200 175 150 70 25 8
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To determine the new combination of cookies and doughnuts that maximizes Kellys utility given the increased price of cookies we need to consider the m... View the full answer
Related Book For
Macroeconomics Principles, Applications, and Tools
ISBN: 978-0132555234
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
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