Suppose that Fozzie consumes tulips and apps. The price of tulips is $5 per unit and the price of apps is $10 per unit. The table shows Fozzie's utility from the consumption of each good; each row represents a possible consumption bundle. Currently, Fozzie is consuming 18 tulips and 9 apps.
Quantity of
tulips
Utility of
tulips (utils)
Q of
apps
Utility of
apps (utils)
10
50.00
13
263.00
12
68.30
12
258.00
14
81.00
11
250.00
16
89.00
10
240.00
18
93.70
9
227.00
20
96.40
8
212.00
22
97.74
7
195.00
24
98.20
6
175.00
26
98.56
5
150.00
a. Calculate the marginal utility per dollar of going from eight to nine apps.
utils/$
b. To increase total utility without increasing spending, should Fozzie change the amount of consumption of either good?
No, Fozzie is already consuming at the optimal consumption bundle.
Yes, Fozzie should choose more tulips and more apps.
Yes, Fozzie should choose fewer tulips and more apps.
Yes, Fozzie should choose more tulips and fewer apps.
c. What is the total utility at the optimal consumption bundle?
utils
