Question

If the price of a soda is $2, the price of a hamburger is $6, and George has $20 of income, George's utility maximizing combination of sodas and hamburgers per day is:

Answer 1

2 hamburgers and 4 sodas

Step-by-step explanation:

The utility's function was missing, so I looked for it:

Hamburgers per Day Total Utility Marginal Utility MU per $

1 30 30 5

2 52 22 3.67

3 67 15 2.5

4 76 9 1.5

5 80 4 0.67

Sodas per Day Total Utility Marginal Utility MU per $

1 20 20 10

2 35 15 7.5

3 47 12 6

4 57 10 5

5 64 7 3.5

If George wants to maximize his utility per dollar spent, he should buy 2 hamburgers and 4 sodas. This will yield him 52 utils (form hamburgers) and 57 utils (form sodas) = 109 utils per day