Question
Please complete the requested items 1-3 below and show as much work as you can. Submit your responses to this assignment by clicking the blue
Please complete the requested items 1-3 below and show as much work as you can. Submit your responses to this assignment by clicking the blue 'Submit' button to locate your file and confirm its upload.
Jan derives utility from purchasing hoodies and shorts, and Jan's marginal utility values for each good are given below. A hoodie costs $50 and a pair of shorts costs $25. Jan has $150 to spend on these two types of goods. The table below provides information about Jan's utility values.
Hoodies (Quantity) | Total Utility | Marginal Utility | Shorts (Quantity) | Total Utility | Marginal Utility |
---|---|---|---|---|---|
1 | 75 | 75 | 1 | 30 | 30 |
2 | 50 | 2 | 55 | ||
3 | 160 | 35 | 3 | 75 | |
4 | 90 | ||||
5 | 100 | 10 | |||
6 | 100 | 0 |
This assignment is Copyright 2021 by Sierra Moussatche, All Rights Reserved.
- What is Jan's total utility from consuming 2 hoodies? Show your work to find this value that is missing from the table above.
- What is Jan's marginal utility of consuming the 2nd, 3rd, and 4th pairs of shorts? Show your work to find these values that are missing from the table above.
- There are 4 possible combinations of these two goods that will use all of Jan's budget: (0 Shorts, 3 Hoodies), (2 Shorts, 2 Hoodies), (4 Shorts, 1 Hoodie), and (6 Shorts, 0 Hoodies). What are the total utility values for each possible combination? What is the utility maximizing bundle and how do you know? Again, show your work.
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