Saul Goodman of "Better Call Saul" fame is a busy lawyer, capable of getting any client out of a legal mess. The problem is because he is always so busy trying to serve his (shady) clients, he does not get enough time to eat proper meals during the day. So, he mostly survives oncoffee(X₁) anddonuts(X₂₎to get him through the day.

Saul's utility function reflecting his preference for coffee and donuts is given by:U(X₁, X₂) = 6X₁X_2.

His daily allowance for his meals is$36. He must spend the entire amount each day to buy his coffee and donuts, i.e., he cannot save any of it.

The price of a cup of coffee is $3 and the price of a donut is $2.

Question 11:What is the absolute value of theslope of Saul's budget line?

Hint:We know the slope of a consumer's budget line is a negative number. The budget line is a downward-sloping straight line. This question is asking for the absolute value of the slope, which will be a positive number.

a) 2

b) 3/2

c) 1/3

d) 1/2

Question 12:If Saul ends up choosing2 cups of coffee (X₁)and2 donuts (X₂), do you think he will be maximizing his utility level?

a) How can I answer this question? I have not studied the microeconomic theory on consumer behavior and optimal consumption choice in Econ E1010.

b) Yes, Saul will maximize his utility if he chooses this bundle.

c) No, Saul will not maximize his utility level if he chooses this bundle.

d) Maybe.

Question 13:With the help of your knowledge of microeconomic theory, can you identify which consumption bundle will maximize Saul's utility from his daily coffee and donuts consumption?

a) X1 = 0, X2 = 4

b) X1 = 2, X2 = 2

c) X1 = 6, X2 = 9

d) X1 = 9, X2 = 6

Question 14:What is Saul'stotal level of utilitywhen he buys and consumes theoptimal combinationof coffee and donuts?

a) U = 420

b) U = 348

c) U = 324

d) U = 268