# Econmics - Marginal Utility

total utility of total utility of
cheeseburgers french fries
0 0
20 8
36 14
48 18
56 20
60 20

What is the utility-maximizing combination of cheeseburgers and french fries if cheeseburgers are \$2 and french fries are \$1 and you have \$7 to spend (and you can spend all of it).

-------------------------------------------

If I read the chart right, the utility of 4 cheesburgers is 56, and of five fries 20. There is a missing column (number items) on the chart.

Lets do it with linear programming:

Make a graph, the vertical axis is cheeseburgers, the horizontal axis is fries.

You have seven dollars, so one point on the graph is (1,3) (that is one fries, three cheesburgers). Another point on the line is 3,2. Plot a line through those two points.Now, look at the corners. The corners are 7,0 and 1,3 (0,3.5 is not allowed), and 0,3.

Test each corner point for utility.

point value
0,3 48
1,3 56
7,0 probably 20

Looks like 1 fry and three cheesburgers is max utility.

I hope I read the utitily chart right.

1. 👍 0
2. 👎 0
3. 👁 180

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