(240)-343-2585
Select Page

Juliette and Andrew regularly go to the movies, where they like to consume popcorn and slushies. At the movies, Juliette’s utility function is given by UJ = √P × S, where P is the number of cups of popcorn and S is the number of slushies she consumes. Andrew’s utility function is given by Ua = P + S. a. Compute the utility Juliette and Andrew receive from the following combinations of popcorn and slushies:Units of PopcornUnits of SlushiesJuliette’s UtilityAndrew’s Utility112233b. Suppose that Juliette and Andrew are each consuming 2 popcorns and 2 slushies. Who gets the most happiness from their movie snacks?c. Suppose that Juliette has consumed 2 popcorns and 3 slushies. What is the marginal utility Juliette will receive if she eats another cup of popcorn? What is the marginal utility she will receive if she drinks another slushie?d. When Andrew is consuming 1 popcorn and 1 slushie, another popcorn will bring increase his utility by 1 unit. (Verify this!) When Andrew is consuming 8 popcorns and 1 slushie, another popcorn will again increase his utility by 1 unit. Which assumption of consumer preferences might Andrew’s particular utility function violate? Does Juliette’s utility function appear to violate that assumption, too?