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Q. Assume that Omar s marginal utility for cups of coffee is constant at 3.5 units per cup no matter how many cups he drinks. On the other has well as, 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, as well as so on (that is, declining by 1 units per additional doughnut). In addition, Assume that coffee costs $1 per cup, doughnuts cost $1 each, as well as 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?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9157908

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