Managerial Economics: Foundations of Enterprise Evaluation and Technique: Chapters 5 and seven
Demand Evaluation Workouts
Q1 a. Is Bridget making the utility-maximizing selection? Why or why not?
Bridget’s consumption of wine and cheese shouldn’t be making a utility-maximizing selection. The rationality behind this conclusion is on the utility-maximizing mixture; the marginal models for utility per unit of cash spent have to be equal for every good consumed (Alvino et al., 2018). Nonetheless, on this mixture of merchandise, the marginal utility for every will not be equal, indicating that Bridget shouldn’t be making a utility-maximizing selection as proven under.
Marginal utility of wine =50
Worth of every bottle of wine=$10
Marginal utility per unit of cash for wine = Whole Marginal Utility of wine / Worth of every bottle of wine
Marginal Utility of cheese = 40
Pound of cheese prices = $ 4
Marginal utility per unit of cash for cheese= Marginal Utility of cheese/value of every Pound of cheese
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