Question
If salad costs $8, and soup costs $5, determine Janet's consumer equilibrium with a budget of $20. Confirm this is the correct answer using the
If salad costs $8, and soup costs $5, determine Janet's consumer equilibrium with a budget of $20. Confirm this is the correct answer using the MUx/Px=MUy/Py formula (or show that the answer is very close to equal). If the formula is not completely true, explain why.
I've found the utils for both the soup and salad, I just don't know how to find the choices and the consumer equilibrium.
| Soup | Marginal utility | Mu/P ($5) | Salad | Marginal utility | Mu/P ($8) |
| 1 | 10 | 10/5= 2 utils | 1 | 9 | 9/8=1.1 utils |
| 2 | 8 | 8/5=1.6 utils | 2 | 7 | 7/8=0.88 utils |
| 3 | 4 | 4/5= 0.8 utils | 3 | 5 | 5/8=0.63 utils |
| 4 | 2 | 2/5= 0.4 utils | 4 | 4 | 4/8=0.5 utils |
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The Americans An Economic Record An Economic Record
Authors: Stanley Lebergott
1st Edition
0393953114, 9780393953114
