7As you get more and more of a good or service the extra uti

7.As you get more and more of a good or service, the extra utility you get from that next unit of the same good or service ___(goes up/down/stays same). Because of this, you are willing to pay ___(same/less/more) for or one more unit of the product. Therefore, you must have a fall in price of the good to cause you to buy ____(same/more/less)

8. price per hamburger is $5

Teresa has a budget of $45
Teresa will buy ___ steaks meals per month to maximize her tatal utility
Teresa will buy ___ hamburger meals per month to maximize her total utility
The total utility realized is _________

Anna has a budget of $45 for these meals.
Ana will buy ___steaks per month
Ana will buy ___ hamburger meals per month
The total utility realized is ___________

steaks per month	marginal utility of meals	price per steak meal	hamburger meals per month	marginal utility of hamburger meals
1	20	$10	1	15
2	15	$10	2	8
3	12	$10	3	6
4	10	$10	4	4
5	8	$10	5	2

Solution

7. As you get more and more of a good or service, the extra utility you get from that next unit of the same good or service goes down.

Because of this, you are willing to pay less for or one more unit of the product.

Therefore, you must have a fall in price of the good to cause you to buy more.

8.

steaks per month

marginal utility of meals

price per steak meal

MU/Price

hamburger meals per month

marginal utility of hamburger meals

price per hamburger meals

MU/Price

1

20

$10

2

1

15

$5

3

2

15

$10

1.5

2

8

$5

1.6

3

12

$10

1.2

3

6

$5

1.2

4

10

$10

1

4

4

$5

0.8

5

8

$10

0.8

5

2

$5

0.4

MU of money expenditure of the two goods are equal at 3 units of steaks and 3 units of hamburger and this point the expenditure is equal to the budget.

3 steaks @ $10 = $30 and 3 hamburger @ $5 = $15

Total Expenditure equals to $45.

Teresa has a budget of $45

Teresa will buy 3 steaks meals per month to maximize her total utility

Teresa will buy 3 hamburger meals per month to maximize her total utility

The total utility realized is 76. (20+15+12) + (15+8+6)

Anna has a budget of $45 for these meals.

Ana will buy 3 steaks per month

Ana will buy 3 hamburger meals per month

The total utility realized is 76.

steaks per month	marginal utility of meals	price per steak meal	MU/Price	hamburger meals per month	marginal utility of hamburger meals	price per hamburger meals	MU/Price
1	20	$10	2	1	15	$5	3
2	15	$10	1.5	2	8	$5	1.6
3	12	$10	1.2	3	6	$5	1.2
4	10	$10	1	4	4	$5	0.8
5	8	$10	0.8	5	2	$5	0.4