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Consider the following data:
Cola ( C)
Orange Juice (O)
12 oz. Cans
Total Utility
12. oz. Cans
0
1
200
500
2
350
700
3
450
800
4
525
850
5
550
875
A. Construct a table showing the marginal utility derived from the consumption of cola and orange juice. Also show the trend in marginal utility per dollar spent (the MU/P ratio if
PC=$0.50 and PO = $1.
B. If two cans of orange juice are consumed, what level of cola consumption could also be justified?
C. At the prices given above what is the MRS at the optimal level of consumption?
D. What is the optimal allocation of a $4.00 budget? Explain.
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