Question
The below table gives the total utility Jamal derives from the consumption of coffee and cream puffs. Jamal has $12 to spend on these two confectionery goods. The price of a coffee is $3 and the price of a cream puff is $1.50
a) Complete the table
Coffee Cream puffs
|
Quantity
|
TU
|
MU
|
(MU/P)
|
Quantity
|
TU
|
MU
|
(MU/P)
|
|
0
|
0
|
|
|
0
|
0
|
|
|
|
1
|
126
|
|
|
1
|
54.0
|
|
|
|
2
|
243
|
|
|
2
|
103.5
|
|
|
|
3
|
342
|
|
|
3
|
145.5
|
|
|
|
4
|
414
|
|
|
4
|
177.0
|
|
|
|
5
|
441
|
|
|
5
|
196.5
|
|
|
b) Does this follow the Law of diminishing marginal utility? Explain why?
c) what is your optimal combination of coffee and cream puff?