To make things a little more realistic, suppose there are two goods, and a budget constraint as given by the following numbers ......
Energy Drinks
Q = 1, 2, 3, 4, 5, 6, 7
TU = $12, 22, 30, 36, 40, 42, 42
Find MU.
Bubble Gum
Q = 1, 2, 3, 4, 5, 6, 7
MU = $6, 5, 4, 3, 2, 1, 0
Find TU.
Suppose your income = $11 and you intend to spend it all, the price of Energy Drinks = $2 and the price of Bubble Gum Packs = $0.50
To maximize your utility, how many Energy Drinks and Bubble Gum Packs will you purchase? (Hint: It's helpful to find the MU/P for each good first.)
Follow the approach in the text to answer this question. There may be more than one way to arrive at the correct answer.
More to follow.
