Question 6
Suppose your marginal utility for cups of coffee is constant at 2.5 utils per cup, no matter how many cups you drink. In contrast, your marginal utility per doughnut is 10 for the first doughnut you eat, 9 for the second, 8 for the third, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose coffee costs $1 per cup, doughnuts cost $1 each, and you have a budget that you can spend only on doughnuts, coffee, or both.
How big would that budget be before you spend a dollar buying a first cup of coffee?