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Economics Please give detailed solution with CLEAR EXPLANATION WITH ALL THE REASONS and formulas. Thank you. Sean likes to consume bagel and coffee at Fast
Economics Please give detailed solution with CLEAR EXPLANATION WITH ALL THE REASONS and formulas. Thank you. Sean likes to consume bagel and coffee at Fast Breakfast. The price of bagel is $1.50 while the price of coffee is $2. The table below shows the quantity and total utility for Sean's consumption of bagel and coffee. Use the information to answer the questions below. Number of Total Utility from Number of Total Utility from Bagel consumption of Bagel Coffee consumption of Coffee 30 20 45 30 57 46 66 GUAWN 60 73.5 72 76.5 76 73.5 70 a) Determine Sean's marginal utility for coffee and bagel. b) Use your answer in A to illustrate the law of diminishing marginal utilities. c) Using the rule of equal marginal utility per dollar spent, answer the following questions: - Supposing Sean has no budget constraint, determine Sean's optimal combination of bagel and coffee. Supposing Sean's maximum budget for breakfast is $15, determine Sean's optimal combination of bagel and coffee. Supposing the cost of dough increases and leading to the price of bagel from $1.50 to $3, determine Sean's optimal combination of bagel and coffee. (Sean's budget remains at $10). d) What is income and substitution effect
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