Tom Enjoys Eating Cookies and Drinking Milk, but He Experiences

question 27

Essay

Tom enjoys eating cookies and drinking milk, but he experiences diminishing marginal utility when consuming both of them. The accompanying table represents the marginal utility he gets from the first 5 units of each item. Cookies cost 50 cents each, whereas glasses of milk cost $1.00 each. $\begin{array}{rrr}\text { Cookies } & \text { Marginal } & \text { Ghsses of } & \text { Marginal } \\\text { Comsuned } & \text { Utility } & \text { Milk } & \text { Utility }\\0&- & 0 & - \\1&12 & 1 & 18 \\2&9 & 2 & 12 \\3&6 & 3 & 6 \\4&3 & 4 & 0 \\5&0 & 5 & -6\end{array}$
a. If Tom has only $2.00, which combination of milk and cookies maximizes his utility?
b. If Tom's spending ability increases to $3.50, what combination of milk and cookies maximizes his utility?
c. If Tom does not have a budget constraint, what combination of milk and cookies maximizes his utility?

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Definitions:

Depth

The perceived distance from the observer to a target point, often associated with the dimensionality of space in visual perception.

Distance

The amount of space between two points, typically measured physically or conceptually.

Brightness

The perception of how light or brilliant an object or light source appears, influenced by the intensity of the light it emits or reflects.

Estimate

An approximation or educated guess based on existing data or observations, often used where exact data is unavailable.