Question: Sally consumes only two goods, shoes and everything else. For five different shopping trips (each with different prices), the prices and Sally's marginal utilities are

Sally consumes only two goods, shoes and "everything else." For five different shopping trips (each with different prices), the prices and Sally's marginal utilities are shown below.
Sally consumes only two goods, shoes and

a. Is Sally maximizing her total utility on each shopping trip? Explain why or why not.
b. Using what you have learned in this chaptet about marginal utility, explain how the number of shoes consumed is changing as their price changes.
c. Can you detect the shape of Sally's demand curve for shoes from the data shown in the table?

Everything Else MU Price (S) MU Price ($) Shoes Trip 1 125 250 Trip 2 100 200 50 Trip 3 75 150 50 Trip 4 Trip 5 100 100 100 100 100 50 50 25 100 50 50 50

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a In order to maximize utility the ratio of MU to p must be equal across all products For ... View full answer

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