Bananas Apples -The Table Above Gives Sam's Marginal Utility Schedule for Bananas

question 138

Essay

Bananas Apples

-The table above gives Sam's marginal utility schedule for bananas and apples. Sam's fruit budget is $10.
a) If bananas cost $1 per pound and apples cost $2 per bag, what is Sam's marginal utility per dollar for all quantities of both goods?
b) What is the utility maximizing combination of bananas and apples for Sam?
c) If the price of bananas increases to $2 per pound, how does Sam's marginal utility per dollar for bananas change?
d) At the banana price of $2 per pound, what is the new utility maximizing combination of bananas and apples for Sam?
e) List two points on Sam's demand curve for bananas.

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Inadequate Aggregate Demand

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Economists who believe reducing barriers for people to produce (supply) goods and services, like lower taxes, will stimulate economic growth.