Utility Problem Set[1]

1. Suppose that the price of oranges is $1 per unit and the price of pencils is $70 per unit. In addition, suppose that your income is $1900.

If you spend all your money on oranges, how many oranges can you buy?

2. The table below shows total utility for two products. Suppose that the price for product A is $5 and the price for product B is $5.

Number of product A	Total Utility for A	Number of product B	Total Utility for B
0	0	0	0
1	140	1	180
2	260	2	340
3	360	3	460
4	440	4	520
5	500	5	540

Given this data, complete the table below:

Quantity of A	Marginal Utility for A	Marginal Utility for A per dollar	Quantity of B	Marginal Utility for B	Marginal Utility for B per dollar
0			0
1			1
2			2
3			3
4			4
5			5

Use the following information to answer questions 3 and 4:

The table below shows total utility for two products. Suppose that the price for product A is $5 and the price for product B is $5.

Number of product A	Total Utility for A	Number of product B	Total Utility for B
0	0	0	0
1	140	1	180
2	260	2	340
3	360	3	460
4	440	4	520
5	500	5	540

Suppose that a person has $25.

3. How many units of product A should she buy to maximize her happiness given her budget constrain?

4. How many units of product B should she buy to maximize her happiness given her budget constrain?

5. Suppose that the original budget constraint is in blue and the consecutive budge constraint is in red.

\f20 15 10 Number of pineapples 5 5 10 15 Number of books