Short free-response question
Spending a budget on snacks
- Unit 1
- 5 points
- About 12 minutes
You can use a calculator on this question, just like on exam day.
A shorter question with a few lettered parts on one situation, often built on a table, a payoff matrix or a given or described graph. You make claims, explain them, calculate a value, or describe a labeled graph and show a change on it. On the exam: Questions 2 and 3 of 3 in Section II; 5 points each, a quarter of the section score each. About 12 minutes suggested for each. Four-function calculator allowed.
The question and its sources
Jada spends her entire budget of $18 a week on granola bars and smoothies. A granola bar costs $2 and a smoothie costs $4. The table shows the marginal utility (in utils) she gets from each unit she buys in a week.
Table 1. Jada's marginal utility
| Unit | Marginal utility of granola bars (utils) | Marginal utility of smoothies (utils) |
|---|---|---|
| 1st | 20 | 40 |
| 2nd | 16 | 32 |
| 3rd | 12 | 24 |
| 4th | 8 | 12 |
| 5th | 4 | — |
Source: Hypothetical data
Suggested time: 12 minutes
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Part (a)
1 pointCalculate the marginal utility per dollar of the second smoothie. Show your work.
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Part (b)
1 pointIdentify the number of granola bars and the number of smoothies that maximize Jada's total utility.
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Part (c)
1 pointExplain why the combination you identified in part (b) maximizes Jada's utility.
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Part (d)
1 pointSuppose Jada instead buys 5 granola bars and 2 smoothies. Should she buy more granola bars or more smoothies to raise her total utility? Explain using marginal utility per dollar.
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Part (e)
1 pointCalculate Jada's total utility at the combination you identified in part (b). Show your work.
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