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Question: 2 utilitymaximization 3 points consider a rational utilitymaximizing consumer who...

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2. Utility-Maximization (3 points)

Consider a rational, utility-maximizing consumer who is choosing between two goods: clothing (C) and food (F). The utilities of the two goods are independent, so total utility (U) = Uc+Uf. The following chart shows the utility from each good:

Quantity consumed of Food (F)

0

1

2

3

4

5

Utility from F

0

12

20

24

26

27

Quantity of clothing (C)

0

1

2

3

4

5

Total Utility from C

0

40

70

90

100

100

The price of clothing is $5 per unit and the price of food is $1 per unit.

Explain how this consumer would allocate an income of $18 on the two goods.

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