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Question E1 A restaurant patron is considering the consumption of steaks and pies subject to a fixed amount of spending (the particular level of spending
Question E1 A restaurant patron is considering the consumption of steaks and pies subject to a fixed amount of spending (the particular level of spending does not matter). Let's say that, at a particular level of steak consumption, her marginal utility of steak is 16 and that, at a particular level of pie consumption, her marginal utility of pie is 18. Also assume that the price of steak is $5.50 per pound (P = $5.50) and the price per slice of pie is $1.50 (Pp = $1.50). Explain why she should or should not swap $1 of her expenditure between the two goods. In answering, make sure you are clear on the direction of the swap (if any) and make sure to support your answer using the values provided. Demonstrate understanding in your answer. Finally, make full use of the appropriate units - a generic answer may not get credit.Question E2 Using the relevant data from the previous problem, explain which good (steak or pie) has the cheaper cost for the next (additional) utile and why. This will entail making use of the values and interpreting them appropriately to successfully explain. NOTE: You are not simply identifying the good but also explaining why you chose it
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