Exam #2 Review Problems Answers:
Sample Problems:
(1) Refer to the following MU table:
Q
ua
nti
tie
s
of
M
r.
Pi
bb
Q
ua
nt
iti
es
of
re
d
vi
ne
s
1
2
1
3
2
1
2
2
3
1
3
1
4
1
4
4
If you have a budget of $8, a Mr. Pibb is $1 and a box of red vines is $2.
How much of
each will you buy to maximize your total utility?
ANSWER:
Compare the first Mr. Pibb with the first box of red vines, 20/$1 >30/$2 –
buy the Mr. Pibb. Then compare the second Mr. Pibb with the first box of red vines,
16/$1 > 30/$2 – buy the second Mr. Pibb. Continuing on, compare the third Mr. Pibb
with the first box of red vines, 12/$1 < 30/$2 – buy the first box of red vines. Then
compare the third Mr. Pibb with the second box of red vines, 12/$1 > 20/$2 – buy the
third Mr. Pibb. Then compare the fourth Mr. Pibb with the second red vine, 10/$1 =
20/$2 – you like both the same and since you have exactly $3 left you can afford both.
This exhausts your money and you have bought 4 Mr. Pibbs and 2 boxes of red vines.
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 Fall '08
 MCLEOD,MARKPEHLIVAN,AYSEOZG
 Economics, Supply And Demand, Mr. Pibb, red vines

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