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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

  1. Compute each marginal utility per dollar for hotdog and marginal utility per dollar for hamburger. Complete the table above.
  2. What combination of hotdog and hamburger will maximise Carol's utility?

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