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Carol spends $40 budget on two goods, hotdog and hamburger. The table below shows her marginal utility for hotdogs and hamburgers. The price of a
Carol spends $40 budget on two goods, hotdog and hamburger. The table below shows her marginal utility for hotdogs and hamburgers. The price of a hotdog is $5 and the price of a hamburger is $10.
Quantity of hotdog | Marginal Utility (hotdog) | Marginal Utility per Dollar (hotdog) | Quantity of hamburger | Marginal Utility (hamburger) | Marginal Utility per Dollar (hamburger) |
1 | 150 | 1 | 200 | ||
2 | 120 | 2 | 180 | ||
3 | 100 | 3 | 150 | ||
4 | 90 | 4 | 120 | ||
5 | 60 | 5 | 100 | ||
6 | 40 | 6 | 60 |
- Compute each marginal utility per dollar for hotdog and marginal utility per dollar for hamburger. Complete the table above.
- What combination of hotdog and hamburger will maximise Carol's utility?
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