# How to complete the missing cells in the filing table?

## if the price of a cheeseburger is $2, the price of a bag of french fries is$1, and you have $6 to spend (and you spend all of it), what is the utility-maximizing combination of cheeseburgers and french fries? ##### 1 Answer Nov 6, 2016 When the consumer consumes 2 units of cheese and 2 units of fries, his total utility is maximum. #### Explanation: First complete the table Use this formula. TU of the 3rd cheese burger = Total utility of the 2nd cheese burger + Marginal Utility of the 3rd cheese burger This is the Formula to Calculate Total Utility TUn = TU(n-1) - MUn Where - TUn = Total Utility of the nth unit TU(n-1) = Total Utility of the (n-1)th unit MUn = Marginal Utility of the nth unit For example in our case – Total Utility of the 3rd cheese burger = Total utility of the 2nd cheese burger + Marginal Utility of the 3rd cheese burger This is the formula to calculate Marginal Utility – MUn = TUn - TU(n-1) Where - MUn = Marginal Utility of the nth unit MUn = Total Utility of the nth unit TU(n-1) = Total Utility of the (n-1)th unit After completing the table you have to find the Ratios - Marginal Utility of Cheese burger/ price of cheese burger and Marginal utility of French Fries/Price of French fries for each unit. Place the values in a new column in the existing table and populate it with the values. Keep in mind when he consumes nothing, his TU = 0 and MU = 0 Now you have to apply the conditions to get maximum Total Utility 1st condition $\frac{M {U}_{b}}{P} _ b = \frac{M {U}_{f}}{P} _ f$2nd condition $\left({Q}_{b} \times {P}_{b}\right) + \left({Q}_{f} \times {P}_{f}\right) =$Total amount [Quantity of cheese x Price of cheese) + (Quantity of Fries x Price of fries) = Total amount According to our table when the consumer consumes 1 unit of cheese and 1 unit of fries, the first condition is satisfied and not the second condition. When the consumer consumes 2 units of cheese and 2 units of fries, both the conditions are satisfied. $\frac{M {U}_{b}}{P} _ b = \frac{M {U}_{f}}{P} _ f$; 8 = 8 $\left({Q}_{b} \times {P}_{b}\right) + \left({Q}_{f} \times {P}_{f}\right) =\$Total amount ; (2 x 2) + (2 x 1) =6

Hence when the consumer consumes 2 units of cheese and 2 units of fries, his total utility is maximum.

Total Utility = TU from 2 units of cheese + TU from 2 units of Fries = 36 + 18 = 54 units.