Show all steps and calculations for full marks.

1. Rony is choosing between two snacks, chips and sour gums, and her marginal utility from each is as shown below.

Units of Chips	MUc	Units of Sour Gums	MUs
1	10	1	8
2	8	2	7
3	6	3	6
4	4	4	5
5	3	5	4
6	2	6	3

a. If Rony's income is $9 and the price of chips and sour gums are $2 and $1 respectively, what quantities of each will Rony purchase to maximize utility? ( show all your work)

b. What total utility will Rony realize?

c. Assume that, other things remaining unchanged, the price of chips falls to $1. What quantities of chips and sour gums will she now purchase?

d. When the price of chips is $1, what is Rony's total utility?

e. Using the two prices and quantities for chips, draw a demand curve for chips for Rony.

f. Calculate the price elasticity of demand for chips.

2. Ali enjoys dumplings and veggies for lunch everyday. Ali's marginal utility of the last dumplings she eats is 42 and the marginal utility of the last serving of veggies is 30. If the price of a serving of dumplings is $7, what would the price of a serving of veggies have to be in order for Ali to maximize her utility? Explain.

3. Marty has $30 to spend on toys and books. Marty's favourite toys are $5 each and his favourite books are $6 each.

a. Draw a budget line for Marty, showing the combination of toys and books he can afford.

b. Suppose the price of the books rises to 10.00 and at the same time, his budget increases to $60. Draw a new budget line, on the graph in Part A.