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PS 2 revised

# PS 2 revised - JF-1 10 10 1 8 8 2 19 9 2 12 4 3 27 8 3 14 2...

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Economics 1 Sections 114-118 Problem Set 2 Instructor: Professor Gunter TA: Christopher Zwicker You are taking your girlfriend/boyfriend to the carnival and you have a tight budget of \$24 to spend on two diversions, RIDES (R) and JUNK FOOD (JF). Each RIDE costs \$3.20 and each piece of JUNK FOOD costs \$3.20. Assume that: a.)1 RIDE = 1 ride for both you and your buddy b.)1 JUNK FOOD = enough food for both you and your buddy The utility breakdown for each number of rides and each piece of junk food is as follows: # of Rides Total Utility (rides) Marginal Utility (last ride) # of JFs Total Utility (JF) Marginal Utility (last
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Unformatted text preview: JF)--1 10 10 1 8 8 2 19 9 2 12 4 3 27 8 3 14 2 4 31 4 4 13-1 5 33 2 5 7-6 6 34 1 6-8-15 7 33-1 7-58-50 8 31-2 8-158-100 1.) Find the Marginal Utility per dollar spent (MU/\$) of both RIDES and JUNK FOOD. 2.)Using the RULE OF EQUAL MARGINAL UTILITY PER DOLLAR , find all the combinations of RIDES and JUNK FOOD that have the same marginal utility per dollar spent. 3.)Using your answers to question #2, find the combination of RIDES and JUNK FOOD that will provide you and your significant other the most Utility, with your current budget constraint. Justify your answer (in words or numbers)....
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