Question

The following table shows​ William's utility from consuming slices of pizza and cans of Coke.

Slices of PizzaPizza	Total Utility from PizzaPizza	Marginal Utility from Last Slice	Cans of CokeCoke	Total Utility from CokeCoke	Marginal Utility from Last Can
0	0	​-	0	​-	​-
1	36	36	1	30	30
2	66	30	2	55	25
3	90	24	3	75	20
4	108	18	4	90	15
5	120	12	5	100	10
6	126	6	6	105	5

Suppose William has ​$8.608.60 per week to spend on pizzapizza and CokeCoke. The price of a slice of pizzapizza

is ​$3.603.60 and the price of a can of CokeCoke is ​$1.001.00. If William wants to maximize his​ utility, he should buy

nothing ​slice(s) of pizzapizza and nothing ​can(s) of CokeCoke.

Answer 1

Income = 8.6

Price of coke = 1

Price of pizza = 3.6

Marginal utility per dollar can be calculated as: marginal utility of good / price of that good

Marginal Utility of Pizza	Marginal utility per dollar of pizza	Marginal Utility of Coke	Marginal utility per dollar of coke
-	-	-	-
36	10.0	30	30
30	8.3	25	25
24	6.7	20	20
18	5.0	15	15
12	3.3	10	10
6	1.7	5	5

From 8.6, consumer can only consume 1 pizza and 5 coke to spend all of her money. It will spend her 1 * 3.6 + 5 * 5 = 8.6. This combination will maximize their utility.