Marginal Utility

Topics: Harshad number, Carbohydrate, Low-carbohydrate diet Pages: 2 (426 words) Published: October 25, 2014

QUESTION 1
Suppose Bill is on a low-carbohydrate diet. He can eat only three foods: Rice Krispies, cottage cheese, and popcorn. The marginal utilities for each food are tabulated below. Bill is allowed only 167 grams of carbohydrates daily. Rice Krispies, cottage cheese, and popcorn provide 25, 6, and 10 grams of carbohydrates per cup, respectively. Referring to the accompanying table, respond to the following questions: Unit of food(cups/day) Marginal Utility of Rice KrispiesMarginal Utility of Cottage Cheese Marginal Utility of Popcorn 1 175 72 90

2 150 66 80
3 125 60 70
4 100 54 60
5 75 48 50
6 50 36 40
7 25 30 30
8 25 18 20
Given that Bill can consume only 167 grams of carbohydrates daily, how many cups of each food will he consume daily? Show your work. Answer
Based on the data above , calculation will be tabulated as follows, assuming : Grams that each food provides = Price of consuming the good Carbohydrates that Bill can consume daily = Income
Calculation to arrive with maximization of utility of these 3 foods following the formula below , with maximizing 167grams carbohydrates that Bill allowed to consume: MU(Rice Krispies)
Price (Rice Krispies) = MU(Cottage Cheese)
Price (Cottage Cheese) = MU(Popcorn)
Price (Popcorn)
Tabulation of calculation on Marginal Utilities/Price is as follows :Rice KrispieCottage Cheese Popcorn Unit of food(cups/day) Marginal Utility / Grams Marginal Utility / Grams Marginal Utility / Grams 1 7 12 9

2 6 11 8
3 5 10 7
4 4 9 6
5 3 8 5
6 2 6 4
7 1 5 3
8 1 3 2
Per Cup Rice KrispiesCarbohydrat (grams) Cottage Cheese Carbohydrat (grams) PopcornCarbohydrat (grams) 1 25 6 10

Based on above table, the maximization of carbohydrates will be obtained on rows highlighted yellow. The calculation of total grams that will be consumed are calculated as below :Option   Rice KrispieCottage Cheese Popcorn Total Carbohydrate consumed 1 Cups of food 2 6 4  

Grams 25 6 10  
Total 50 36 40 126
2 Cups of food 3 7 5  ...
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