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suppose that omar's marginal utility for cup of coffee is constant at 2.5 utils per cup no matter how many cup he drinks. on the other hand, his marginal utility per donut is 11 for the first donut he...

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suppose that omar's marginal utility for cup of coffee is constant at 2.5 utils per cup no matter how many cup he drinks. on the other hand, his marginal utility per donut is 11 for the first donut he eats, 10 for the second he eats, 9 for the third he eats, and so on declining by one util per additional donut. in addition, suppose that coffee cost $1 per cup, donut cost $1 each, and omar has a budget that he can spend only on donuts, coffee, or both. How big will that budget have to be before he would spend a $1 buying a first cup of coffee?
Answered Same Day Dec 31, 2021

Solution

Robert answered on Dec 31 2021
95 Votes
Suppose that omar's marginal utility for cup of coffee is constant at 2.5 utils per cup no matter
how many cup he drinks. on the other hand, his marginal utility per donut is 11 for the first donut
he eats, 10 for the second he eats, 9 for the third he eats, and so on declining by one util per
additional donut. in addition, suppose that coffee cost $1 per cup, donut cost $1 each, and omar
has a budget that...
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