Assuming john's parents do not allow him to use any savings. What is the optimal consumption bundle of pizza and funnel cakes? E
1 answer:
The optimal quantity of pizza slices for John to buy is 5 slices.
<h3>How to calculate the quantity?</h3>From the information given in the diagram, it can be seen that the marginal utility from the consumption of the 6th slice is zero.
In this case, the optimal quantity of pizza slices for John to buy is 5 slices.
When John buys 8 slices, the total utility will be:
= 20 + 12 + 10 + 6 + 2 + 0 - 2 - 6
= 42 utils.
When John’s parents do not allow him to use any savings, his optimal consumption bundle of pizza and funnel cakes is $20.
At John’s optimal consumption bundle, the total utility that he will gain will be:
= (20 + 12) + (50 + 40 + 32 + 20)
= 32 + 142
= 174 utils
Learn more about optimal quantity on:
#SPJ4
You might be interested in
Answer:
WACC without taxes = 6.84% (rounding up to two decimals)
WACC with a tax rate of 21%= 6.27% (rounding up two decimals)
Explanation:
To calculate WACC we need to know the weight's for equity adn debt:
Equity: 24,000,000 x 13 = 312,000,000
Debt 368,000,000
Value: 680,000,000
Debt weight's 368M/680M = 0.458823529
Equity weight's 312M/680M =0.541176471
Now we have he weights can calculate the WACC
Ke 0.09
Equity weight 0.458823529
Kd 0.05
Debt Weight 0.541176471
t 0 (as this is a pretax, tax is zero)
WACC 6.83529%
then, for b we are asked for a 21% tax rate, everything else remains unchanged:
if t = 21% then:
t 0.21
WACC 6.26706%