Units

1

2

3

4

5

6

7

Utils - Pizza
Utils - Soda

40
35

38
33

34
31

31
29

28
26

25
23

22
20

At a price of $1.00 per slice of pizza or bottle of soda the consumer would make the following purchaes to maxim
Units
Choice
Cost
Marginal Utils
Total Utils

1
P
$1.00
40
40

2
P
$2.00
38
78

3
S
$3.00
35
113

4
P
$4.00
34
147

5
S
$5.00
33
180

6
P
$6.00
31
211

7
S
$7.00
31
242

To maximize utility, the consumer will purchase 7 slices of pizza and 5 bottles of soda.
Note - the MU(Pizza)/$1 = MU(Soda)/$1 at Utility Max: 22/$1 = 23/$1
At a price of $2.00 per slice of pizza and $1.00 per bottle of soda
Utils - Pizza/$
Utils - Soda/$

20
35

19
33

17
31

15.5
29

14
26

12.5
23

11
20

Units
Choice
Cost
Marginal Utils
Total Utils

1
S
$1.00
35
35

2
S
$2.00
33
68

3
S
$3.00
31
99

4
S
$4.00
29
128

5
S
$5.00
26
154

6
S
$6.00
23
177

7
S
$7.00
20
197

To maximize utility, the consumer will purchase 2 slices of pizza and 10 bottles of soda. Why the change? Does it
The consumer buys more soda because he gets more utility per dollar spent than before. The consumer buys few
he gets less utility per dollar spent than before.
Note - the MU(Pizza)/$2 = MU(Soda)/$1 at Utility Max: 34/$2 = 17/$1

Why the change? Does it make sense? ore.5 10 3 6 0.00 26 325 11 P $11.00 38 275 10 S $12.5 a. The consumer buys fewer pieces of pizza because .5 12 S $14.5 17 7.00 17.5 1 8 P $9.00 23 373 9.00 40 237 9 P $11.00 29 271 9 P $9.5 309.00 25 350 12 S $12.00 16 325.00 28 299 10 S $10.5 14 5.00 17 292 11 S $13.8 9 10 11 12 19 17 15 14 11 10 6 6 1 1 ollowing purchaes to maximize his utility 8 S $8.

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