2. Economics
3. 2 utilitymaximization 3 points consider a rational utilitymaximizing consumer who...

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.