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Use the following scenario to answer questions 1-4. Rachel likes Cliff Builder Bars and Chocolate Milk. The bars cost $2 each and the milk costs

Use the following scenario to answer questions 1-4. Rachel likes Cliff Builder Bars and Chocolate Milk. The bars cost $2 each and the milk costs $2.5 per pint jug. Her Utility schedule is given below.

Cliff Builder Bars

Chocolate Milk

Bars

Utility

Marginal Utility

1 pint jug

Utility

Marginal Utility

0

0

0

0

1

250

250

1

300

300

2

490

240

2

560

260

3

715

225

3

770

210

4

923

208

4

920

150

5

1113

190

5

1000

80

6

1283

170

6

1040

40

7

1423

140

7

1080

20

8

1523

100

8

1070

10

9

1587

64

9

1075

5

10

1591

4

10

1075

0

  1. If Rachel has $6.50 to spend, how many Cliff Bars and Jugs of Chocolate Milk will she purchase?
    1. 1 Cliff Bar; 2 Jugs of Chocolate Milk
    2. 4 Cliff Bars; 0 Jugs of Chocolate Milk
    3. 2 Cliff Bars; 3 Jugs of Chocolate Milk
    4. 2 Cliff Bars; 1 Jug of Chocolate Milk

  1. If she has $42.50 to spend, how many of each item will she purchase?
    1. 9 Cliff Bars; 8 Jugs of Chocolate Milk
    2. 8 Cliff Bars; 10 Jugs of Chocolate Milk
    3. 10 Cliff Bars; 9 Jugs of Chocolate Milk
    4. 9 Cliff Bars; 9 Jugs of Chocolate Milk

  1. Assume that Rachel is willing to pay up to $5 for each Cliff Bar and $4 for each jug of chocolate milk. If Rachel has $13 to spend, what is her total consumer surplus?
    1. $12
    2. $8
    3. $15
    4. $18

  1. Cliff Builder Bars are made with soy protein. Assume that a pest destroyed a good portion of the soybean crop and a virus killed large numbers of dairy cows. This increased the price of Cliff bars to $6 and chocolate milk to $5 per pint. If Rachel has $100 to spend, how many of each item will she purchase (based on her maximum willingness to pay from the previous question)?
    1. 20 Cliff Bars; 24 Jugs of Milk
    2. 25 Cliff Bars; 20 Jugs of Milk
    3. Need more information
    4. She wont buy anything

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