1 Emily Loves Magazines And Lattes The Table Below Gives The Total Utility From Her Consumption Of Magazines And Of La 1 (29.49 KiB) Viewed 13 times
1. Emily loves magazines and lattes. The table below gives the total utility from her consumption of magazines and of lattes during a week. # of Magazines 0 a) b) c) 1 2 3 ++ 4 5 6 7 Total Utility 0 45 81 105 117 123 126 120 Marginal Utility MU per Dollar Spent Complete the columns for MU # of Lattes 0 1 2 3 4 5 6 7 Total Marginal Utility Utility 0 44 80 110 136 160 172 180 MU per Dollar Spent Suppose the price of a magazine is $3 and the price of a latte is $2. Complete the columns for MU per dollar spent. Emily's weekly allowance for magazines and lattes is $16. How many magazines and how many lattes will Emily consume in a week if she wishes to maximize her utility and if she spends her entire allowance? Explain.
d) What is the total utility that Emily will derive when she is in consumer equilibrium? Emily can afford to buy 4 magazines if she buys only 2 lattes. Why wouldn't she choose this combination?
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