Question

Sheldon is choosing between purchasing comic books and comic book memorabilia. Let c = the quantity of comic books purchased, m = the quantity of memorabilia. Sheldon’s utility, U, is a function of c and m:

U(c,m) = 0.5 * c * m²

The marginal utility of c is:

MU_c = 0.5*m²

The marginal utility of m is:

MU_m = c*m

Prices: Comic books, P_c = $2, and memorabilia, P_m = $10

Sheldon’s budget: B = $240

Sheldon’s budget constraint: B = c*P_c + m*P_m

Sheldon has maximized his utility with his choice of c and m.

What is Sheldon's optimal (i.e., utility maximized) bundle of comic books, c, and memorabilia, m, and what is his total utility?

• Optimal quantity of comic books:
• Optimal quantity of memorabilia:
• Total Utility:

Hint: Recall the utility maximization equation in the text, CH 6, Consumer Choices.

(Enter whole number, no commas or decimal points.)

Answer 1