Question

1 60 1 40 2 102 2 70 3 132 3 91 4 144 4 106 5 144 5 112 6 138 6 115 7 128 7 115 Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items. What is Keegan's optimal consumption bundle? Please sure to explain how the optimal purchasing rule ($\frac{MU_{pita}}{P_{pita}} = \frac{MU_{tea}}{P_{tea}}$) would guide him to this outcome.

          1
60
1
40
2
102
2
70
3
132
3
91
4
144
4
106
5
144
5
112
6
138
6
115
7
128
7
115
Keegan has $30 to spend on Pita Wraps and Bubble Tea.
The price of a Pita Wrap is $6 and the price of a glass of
Bubble Tea is $3. Table 10-1 shows his total utility from
different quantities of the two items.
What is Keegan's optimal consumption bundle? Please
sure to explain how the optimal purchasing rule
($\frac{MU_{pita}}{P_{pita}} = \frac{MU_{tea}}{P_{tea}}$) would guide him to this
outcome.

Show more…

1
60
1
40
2
102
2
70
3
132
3
91
4
144
4
106
5
144
5
112
6
138
6
115
7
128
7
115
Keegan has 30 to spend on Pita Wraps and Bubble Tea.
The price of a Pita Wrap is6 and the price of a glass of
Bubble Tea is 3. Table 10-1 shows his total utility from
different quantities of the two items.
What is Keegan's optimal consumption bundle? Please
sure to explain how the optimal purchasing rule
((MUpita)/(Ppita) = (MUtea)/(Ptea)) would guide him to this
outcome.

Added by Kevin T.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Akash M

10/16/2023

Step 1

To find the marginal utility, we need to calculate the change in total utility when the quantity of each item increases by one. For example, for Pita Wraps, the MU for the first one is 60 (total utility at 1 Pita Wrap) - 0 (total utility at 0 Pita Wrap) = 60. The Show more…

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able[[1,60,1,40],[2,102,2,70],[3,132,3,91],[4,144,4,106],[5,144,5,112],[6,138,6,115],[7,128,7,115]] Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items. What is Keegan's optimal consumption bundle? Please be sure to explain how the optimal purchasing rule (MU_pita/P_pita = MU_tea/P_tea) would guide him to this outcome. 1,60,1,40 2,102,2,70 3,132,3,91 4,144,4,106 5,144,5,112 6,138,6,115 7,128,7,115 Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items. What is Keegan's optimal consumption bundle? Please be sure to explain how the optimal purchasing rule (MU_pita/P_pita = MU_tea/P_tea) would guide him to this outcome.

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