Marc is shopping for pencil cases and candles. He has a budget of $100. The price of a pencil cases is $20 and the price of candles is $5.

a) Complete the table-(2 marks)

Pencil cases Candles
Quantity TU MU MU/P Quantity TU MU MU/P
0 0 0 0
1 220 1 85
2 400 2 150
3 540 3 195
4 640 4 220
5 700 5 235

b) Conclude whether or not we follow the law of diminishing MU-(1.5 marks)

c) What is optimal combination of pencil cases and candles? (2 marks)

c) Draw the Total utility (TU) and Marginal Utility (MU) for candles and then conclude.

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