# Kory has an income of $50, which she can spend on two goods: CDs and cups of hot chocolate. Both are normal goods for her. Each CD costs $10, and each cup of hot chocolate costs $2. For each of the following situations, decide whether this is Kory's optimal consumption bundle. If not, what should Kory do to achieve her

Kory has an income of $50, which she can spend on two goods: CDs and cups of hot chocolate. Both are normal goods for her. Each CD costs $10, and each cup of hot chocolate costs $2. For each of the following situations, decide whether this is Kory's optimal consumption bundle. If not, what should Kory do to achieve her optimal consumption bundle?

a. Kory is considering buying 4 CDs and 5 cups of hot chocolate. At that bundle, her marginal rate of substitution of CDs in place of hot chocolate is 1; that is, she would be willing to forgo only 1 cup of hot chocolate to acquire 1 CD.

b. Kory is considering buying 2 CDs and 15 cups of hot chocolate. Kory's marginal utility of the second CD is 25, and her marginal utility of the fifteenth cup of hot chocolate is 5.

c. Kory is considering buying 1 CD and 10 cups of hot chocolate. At that bundle, her marginal rate of substitution of CDs in place of hot chocolate is 5; that is, she would be just willing to exchange 5 cups of hot chocolate for 1 CD.

a. Kory is considering buying 4 CDs and 5 cups of hot chocolate. At that bundle, her marginal rate of substitution of CDs in place of hot chocolate is 1; that is, she would be willing to forgo only 1 cup of hot chocolate to acquire 1 CD.

b. Kory is considering buying 2 CDs and 15 cups of hot chocolate. Kory's marginal utility of the second CD is 25, and her marginal utility of the fifteenth cup of hot chocolate is 5.

c. Kory is considering buying 1 CD and 10 cups of hot chocolate. At that bundle, her marginal rate of substitution of CDs in place of hot chocolate is 5; that is, she would be just willing to exchange 5 cups of hot chocolate for 1 CD.

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