You Have Just Spent Two Hours Studying Microeconomics and This

question 25

Essay

You have just spent two hours studying microeconomics and this has made you very hungry. You have $10 to spend on a snack and decide to go to Taco Bell. Putting your newly acquired economics knowledge to use, you have developed the following table to assist with your purchase decision: $$\begin{array} { | c | c | c | c | c | c | c | c | } \hline { \text { Double Decker Tacos } } &&&& { \text { Chicken Burrito Supremes } } \\{ ( \mathrm { P } = \$ 1 ) } &&&& { ( \mathrm { P } = \$ 2 ) } \\\hline \text { Q } & \text { TU } & \text { MU } & \text { MU/P } & \text { Q } & \text { TU } & \text { MU } & \text { MU/P } \\\hline 0 & 0 & & & 0 & 0 & & \\\hline 1 & 20 & & & 1 & 28 & & \\\hline 2 & 34 & & & 2 & 46 & & \\\hline 3 & 44 & & & 3 & 54 & & \\\hline 4 & 48 & & & 4 & 56 & & \\\hline 5 & 48 & & & 5 & 56 & & \\\hline 6 & 42 & & & 6 & 52 & & \\\hline\end{array}$$ (a) Fill in the missing values in the table above.
(b) If you bought 6 tacos and 2 burritos are you maximizing your utility? Explain.

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Definitions:

Step-down Method

A cost allocation method that sequentially assigns service department costs to other departments, including other service departments, based on specified criteria.

Machine Hours

A measure of production time, representing the total hours that machinery is operated in the manufacturing of a product.

Number Of Employees

The overall number of people working for a firm, encompassing both those in full-time and part-time positions.

Step-down Method

A cost allocation method used in accounting to distribute overhead costs to various departments or products.