Question

Quantity of books is 0,1,2,3,4,5,6
Total utility from books is 0,190,255,300,325,340,346
Quantity of copies is 0,1,2,3,4,5,6
Total utility from copies is 0,170,220,250,265,274,276
A) if the consumer have an income of 4 dollars, book cost is 1 dollar and copy cost is 0.20 dollar, which of the combination maximizes the consumer's utility
B) if the consumer has an income of 4 dollars, book cost is 1 dollar and copy cost is 0.20 dollars what is the consumer's utility when he/she maximizes utilitiy

Answer 1

A) If I=$4, Pb=$1 and P of copy $0.2, then

$$\frac {MU_B}{P_B}=\frac {MU_C}{P_C}=45$$

The consumer will take 3 books and will do 5 copies.

B)

$$TU_B=300$$

$$TU_C=274$$