You Have Just Spent Two Hours Studying Microeconomics and This

question 16

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: $$\begin{array} {c}\quad\quad { \text { Double Decker Tacos } } \quad\quad { \text { Chicken Burrito Supremes } } \\{ ( \mathrm { P } = \$ 1 ) } \quad\quad\quad\quad\quad\quad\quad\quad { ( \mathrm { P } = \$ 2 ) } \\\begin{array} { | c | c | c | c | c | c | c | c | } \hline \text { Q } & \text { TU } & \text { MU } & \text { MU/P } & \text { Q } & \text { TU } & \text { MU } & \text { MU/P } \\\hline 0 & 0 & & & 0 & 0 & & \\\hline 1 & 20 & & & 1 & 28 & & \\\hline 2 & 34 & & & 2 & 46 & & \\\hline 3 & 44 & & & 3 & 54 & & \\\hline 4 & 48 & & & 4 & 56 & & \\\hline 5 & 48 & & & 5 & 56 & & \\\hline 6 & 42 & & & 6 & 52 & & \\\hline\end{array}\end{array}$$ (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:

Static Planning Budget

A budget based on the level of expected output before the period begins, and it does not change in response to actual activity levels.

Variable Costs

Expenses that change in proportion to the level of production or sales activities, such as raw materials and direct labor costs.

Actual Costs

The real costs incurred in the production of goods or the provision of services.

Revenue Variance

The difference between actual revenue and budgeted or forecasted revenue, indicating the performance of a business.