Tute05 - answer

Tute05 - answer - ECF1100 MICROECONOMICS Answers to...

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ECF1100: MICROECONOMICS Answers to tutorial 5 Chapter 5, Problem 2 Since the marginal cost of an additional morsel of food is zero, a rational person will continue eating until the marginal benefit of the last morsel (its marginal utility) falls to zero. Chapter 5, Problem 4 Toby is currently receiving (100 utils/gram)/($0.10/gram) = 1000 utils per dollar from his last dollar spent on peanuts, and (200 utils/gram)/($0.25/gram) = 800 utils per dollar from his last dollar spent on cashews. Since the two are not equal, he is not maximising his utility. He should spend more on peanuts and less on cashews since the marginal utility per dollar is larger for peanuts. Chapter 5, Problems 8 and 9 When the price of a slice of pizza is $6 and the price of a movie rental is $3, the affordable combinations and their corresponding utilities are as listed in the table below. The equation for this is 3M + 6P = 24 where M is the number of movies rented and P is number of slices of pizza. Combinations of pizza and rentals that cost $24 per week
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This note was uploaded on 08/30/2011 for the course ECON 101 taught by Professor Shen during the Three '11 term at Monash.

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Tute05 - answer - ECF1100 MICROECONOMICS Answers to...

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