Jeremiah Brown has been making contributions into an individual retirement account for his retirement. His contributions are not
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Answer:
The first case the expenditure is under budget whereas in the third case the expenditure is over budget. The budget is only met in the case 2. Therefore the family should purchase 4 steaks and 2 corns.
Explanation:
As the values of the table are not clear, by searching for the question the data is found which is as attached with the question.
Now As the price of both the corn and steak is 1 so the values of Marginal Utility over price will remain same as given in the attached table.
In order to maximize the marginal utility over expenditure(price) , the cases are required where value of marginal utility over expenditure for corn and steak is same.
Thus following 3 cases will maximize the marginal utility over expenditure.
Case No 01: For the Marginal Utility over Expenditure of 16
n_c1=Units of Corn=1
n_s1=Units of Steak=2
Case No 02: For the Marginal Utility over Expenditure of 14
n_c2=Units of Corn=2
n_s2=Units of Steak=4
Case No 03: For the Marginal Utility over Expenditure of 12
n_c3=Units of Corn=3
n_s3=Units of Steak=6
Now as the constraint of budget exists as $6 so the expenditure for all the cases is calculated as below:
Case 01 : With 1 unit of Corn and 2 units of Steak
Expense is given as
Case 02 : With 2 units of Corn and 4 units of Steak
Expense is given as
Case 03 : With 3 units of Corn and 6 units of Steak
Expense is given as
So in the first case the expenditure is under budget where as in the third case the expenditure is over budget.
The budget is only met in the case 2.
Therefore the family should purchase 4 steaks and 2 corns.
