Arnie Ziffel Has $20 Per Week to Spend on Any

question 104

Essay

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.
$\begin{array}{|c|c|c|c|c|c|c|c|} \hline&&& \text {Marginal}& \text {Quantity }&&&\text {Marginal}\\ \text {Quantity of }& \text {Total }&\text { Marginal }& \text {Utility per}& \text {of Green}&\text {Total }&\text {Marginal}&\text {Utility per}\\ \text {Pineapples}& \text {Utility}& \text {Utility}& \text {Dollar}& \text { Tea}&\text {Utility}&\text {Utility}& \text {Dollar} \\\hline 1 & 32 & & & 1 & 28&& \\\hline 2 & 52 & & & 2 & 46&& \\\hline 3 & 64 & & & 3 & 54 &&\\\hline 4 & 68 & & & 4 & 60&& \\\hline 5 & 70 & & & 5 & 64 &&\\\hline 6 & 71 & & & 6 & 66&& \\\hline 7 & 71 & & & 7 & 67&&\\\hline \end{array}$
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?

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Definitions:

Long-term Lease Obligation

A financial commitment that involves leasing an asset for a long-term period, noted on the balance sheet as a liability.

Capital Lease

A Capital Lease is a lease agreement that has the characteristics of a purchase agreement for accounting purposes.

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Executory Costs

Refers to the costs related to executing a lease that are neither initially capitalized nor recognized in the income statement immediately, typically involving future operating expenses under a lease agreement.