Question

Peter consumes both pizza and pepsi. The table below shows the amount of utility he obtains from both the amounts of these two goods;
Pizza Pepsi
Quantity Utility Quantity Utility
4 slices 115 5 cans 63
5 slices 135 6 cans 75
6 slices 154 7 cans 86
7 slices 171 8 cans 96

(a) suppose pepsi costs $0.50 per can, pizza costs $1 per slice and peter has $9 to spend on food and drinks. What combination of pizza and pepsi will maximize his utility?
(b) To miaximize profit, a perfectly competitive firm should produce the level of output at which marginal cost if equal to price. True, false or uncertain. Explain.
(c) What losses are experienced by consumers if a profit maximizing monopolist supplies them rather than a perfectly competitive industry?
(d) Economists usually assume that consumer preference are logically constant. What does that mean? what are some other assumptions economists make about preferences?

Answer 1

dddddddddddddddddddddddddddd