Reallocate her expenditures between the two goods

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Q. Sammy buys loaves of bread also quarts of milk every week at prices of $1 also 80 cents, respectively. At present she is buying these two products in amounts such which the marginal utilities from the last units purchased of the two products are 80 also 70 utils, respectively. Is she buying the utility maximizing combination of bread also milk? If not, how should she reallocate her expenditures between the two goods?

Q. Assume which marginal propensity to consume is 0.8 also potential o/p is $800 billion. If present real GDP is $850 which of the subsequent policies would bring the economy to potential o/p?

Reference no: EM1323138

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