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#### All Subjects Economics Managerial Economics ECO 201 -Suppose that Omar's marginal utility for cups of coffee

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# ECO 201 -Suppose that Omar's marginal utility for cups of coffee

Question # 00605307
Subject: Economics
Topic: Managerial Economics
Due on: 10/17/2017
Posted On: 10/17/2017 12:57 PM

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Suppose that Omar's marginal utility for cups of coffee is constant at 1.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs \$1 per cup, doughnuts cost \$1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee