Suppose you are interested in purchasing just bottles of wine and pounds of cheese for an...

 

Transcribed Image Text:

Suppose you are interested in purchasing just bottles of wine and pounds of cheese for an upcoming party. Assume you have only $45 to spend. The price per bottle of wine is $5 and the price per pound of cheese is $10. You have estimated the utility from the consumption of wine and cheese at the party according to the following table: Quantity 012345 5 Quantity 012345 Wine (Total Utility) 0 100 175 225 250 260 Cheese (Total Utility) 0 130 250 350 425 465 a) How many bottles of wine and pounds of cheese should you purchase for the party? b) Suppose the price of cheese per pound falls to $7.50. How many bottles of wine and pounds of cheese should you purchase for the party? Why? c) How is the observed change in the quantity demanded of cheese given the decrease in the price of cheese-related to the law of demand? Suppose you are interested in purchasing just bottles of wine and pounds of cheese for an upcoming party. Assume you have only $45 to spend. The price per bottle of wine is $5 and the price per pound of cheese is $10. You have estimated the utility from the consumption of wine and cheese at the party according to the following table: Quantity 012345 5 Quantity 012345 Wine (Total Utility) 0 100 175 225 250 260 Cheese (Total Utility) 0 130 250 350 425 465 a) How many bottles of wine and pounds of cheese should you purchase for the party? b) Suppose the price of cheese per pound falls to $7.50. How many bottles of wine and pounds of cheese should you purchase for the party? Why? c) How is the observed change in the quantity demanded of cheese given the decrease in the price of cheese-related to the law of demand?

Answer rating: 100% (QA)

To determine how many bottles of wine and pounds of cheese you should purchase for the party we need to find the combination that maximizes the total ... View the full answer