Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Puzzle Of Latin American Economic Development

Authors: Patrice Franko

2nd Edition

0742524663, 9780742524668

More Books

Students also viewed these Economics questions

Question

Are there any changes you would recommend in the selection process?

Answered: 1 week ago