Question
7.Albert has $15 to spend each week on coffee and donuts.The price of a cup of coffee is $2, and the price of a donut
7.Albert has $15 to spend each week on coffee and donuts.The price of a cup of coffee is $2, and the price of a donut is $1. If Albert bought 6 cups of coffee and 3 donuts in a week, the marginal utility of coffee would be 120, and the marginal utility of donuts would be 60. To maximize his utility, how should Albert modify his consumption?
(a) Buy more cups of coffee and fewer donuts
(b) Buy fewer cups of coffee and more donuts
(c) Don't change anything. He is already maximizing utility.
(d) Buy more of both goods.
(e) Buy less of both goods.
8.Ruth has inverse demand for wine given byp= 100q. If the price of wine changes from $20 to $40, how does her consumer surplus change?
9. Rebecca likes to eat Taco Bell. Her inverse demand for tacos isp= 102q. What is the change in Rebecca's consumer surplus if the price of a taco rises from $4 to $6?
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