Arnie Ziffel has $20 per week to spend on any combination of pineapples and green tea. The price of a pineapple is $4 and the price of a bottle of green tea is $2. The table below shows Arnie's utility values. Use the table to answer the questions that follow the table.
a. Complete the table by filling in the blank spaces.
b. Suppose Arnold purchases 4 pineapples and 2 bottles of green tea. Is he consuming the optimal consumption bundle? If so, explain why. If not, what combination should he buy and why?
Definitions:
Raising Beef
The agricultural practice of breeding and managing cattle for the purpose of producing beef for consumption.
Ricardian Model
A model in international trade theory that explains international trade patterns based on comparative advantage.
Production Possibility Frontiers
A curve depicting all maximum output possibilities for two goods, given a set of inputs resources, and technology, illustrating the trade-offs in production choices.
Opportunity Cost
Forgoing possible benefits from other options by selecting a particular one.
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