Asked by
Faith Hawkins
on Nov 25, 2024
Verified
A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 32 units. If the unit price of X is $5, then the price of Y must be
A) $5 per unit.
B) $4 per unit.
C) $8 per unit.
D) $7 per unit.
Marginal Utility
The additional satisfaction or benefit that a consumer derives from consuming an additional unit of a good or service.
Equilibrium
A state where supply and demand balance, and as a result, prices become stable.
Unit Price
The cost assigned to a single unit of a product or service, facilitating price comparisons among similar products based on per unit costs.
- Employ the utility-maximization guideline to assist in making prudent consumer decisions within a financial limit.
Verified Answer
DM
Learning Objectives
- Employ the utility-maximization guideline to assist in making prudent consumer decisions within a financial limit.