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olasank [31]
3 years ago
6

Nick lives in San Diego and loves to eat desserts. He spends his entire weekly allowance on jello and pie. A bowl of jello is pr

iced at $1.25, and a piece of apple pie is priced at $3.75. At his current consumption point, Nick's marginal rate of substitution (MRS) of jello for pie is 3. This means that Nick is willing to trade three bowls of jello per week for one piece of pie per week. Does Nick's current bundle maximize his utility—in other words, make him as well off as possible? If not, how should he change it to maximize his utility?
Business
1 answer:
OlgaM077 [116]3 years ago
4 0

Answer:

Yes.

Explanation:

Market rate of exchange of jello for pie:

= Price of a piece of apple pie ÷ Price of jello

= $3.75 ÷ $1.25

= 3.00

At his current consumption point, Nick's marginal rate of substitution (MRS) of jello for pie = 3

Since MRS = Px/Py, hence, at this point of consumption bundle he is having a maximum level of utility.

Therefore, there is no need to change his consumption bundle because he is already at his maximum level.

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Answer:

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Explanation:

According to the given data we have the following:

Amount borrowed= $28,000.00

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Therefore, Total outstanding at end of year 1=$28,000+$2,800

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Net balance at end of year 1=$19,540.79

Hence, To calculate the amount of the interest expense associated with the second payment we would have to make the following calculation:

amount of the interest expense associated with the second payment= $19,540.79×10%=$1,954

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Answer:

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