Managerial Economics: Foundations of Business Analysis and Strategy: Chapters 5 and 7?Demand Analysis Exercises

Managerial Economics: Foundations of Enterprise Evaluation and Technique: Chapters 5 and seven

Demand Evaluation Workout routines

Q1 a. Is Bridget making the utility-maximizing alternative? Why or why not?

Bridget’s consumption of wine and cheese will not be making a utility-maximizing alternative. The rationality behind this conclusion is on the utility-maximizing mixture; the marginal items for utility per unit of cash spent should be equal for every good consumed (Alvino et al., 2018). Nonetheless, on this mixture of merchandise, the marginal utility for every should not equal, indicating that Bridget will not be making a utility-maximizing alternative as proven beneath.

Marginal utility of wine =50

Value of every bottle of wine=$10

Marginal utility per unit of cash for wine = Complete Marginal Utility of wine / Value of every bottle of wine

 = 50/10  

   = 5.00

Marginal Utility of cheese = 40

 Pound of cheese prices = $ 4

Marginal utility per unit of cash for cheese= Marginal Utility of cheese/value of every Pound of cheese

= 40/4

= 10.00