Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 |
- If Rachel has $6.50 to spend, how many Cliff Bars and Jugs of Chocolate Milk will she purchase?
- 1 Cliff Bar; 2 Jugs of Chocolate Milk
- 4 Cliff Bars; 0 Jugs of Chocolate Milk
- 2 Cliff Bars; 3 Jugs of Chocolate Milk
- 2 Cliff Bars; 1 Jug of Chocolate Milk
- If she has $42.50 to spend, how many of each item will she purchase?
- 9 Cliff Bars; 8 Jugs of Chocolate Milk
- 8 Cliff Bars; 10 Jugs of Chocolate Milk
- 10 Cliff Bars; 9 Jugs of Chocolate Milk
- 9 Cliff Bars; 9 Jugs of Chocolate Milk
- 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?
- $12
- $8
- $15
- $18
- 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)?
- 20 Cliff Bars; 24 Jugs of Milk
- 25 Cliff Bars; 20 Jugs of Milk
- Need more information
- She wont buy anything
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started