Math Problem Statement

Manuela has $27 to spend on food. She uses it to buy hamburgers and frozen pizzas. The table below shows Manuela's marginal utility (MU) for both hamburgers and frozen pizzas. Assume that Manuela is a rational consumer who wants to maximize her utility. If the price of a hamburger is $5 and the price of a frozen pizza is $4, Manuela will choose to buy____ frozen pizzas. Hint: You will need to calculate marginal utility per dollar spent (MU/P) for both hamburgers and pizza.

Solution

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Math Problem Analysis

Mathematical Concepts

Marginal Utility
Budget Allocation
Optimization

Formulas

MU/P = Marginal Utility / Price

Theorems

Law of Diminishing Marginal Utility

Suitable Grade Level

Grade 11-12