Asked by
ETHAN SKARMAS
on Dec 19, 2024
Verified
Mrs. Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 75 utils and the marginal utility of the last bag is 100 utils. The prices of soda and pretzels are $0.5 per bottle and $0.6 per bag, respectively. It can be concluded that
A) the two commodities are substitute goods.
B) Mrs. Arnold should spend less on pretzels and more on soda.
C) Mrs. Arnold should spend less on soda and more on pretzels.
D) Mrs. Arnold is buying soda and pretzels in the utility-maximizing amounts.
Marginal Utility
The additional satisfaction or benefit gained from consuming one more unit of a good or service.
Money Income
The total amount of monetary earnings or receipts a person or household receives within a specific period.
Utility-Maximizing
The behavior or principle where individuals or entities choose options that increase their satisfaction or utility to the greatest extent.
- Comprehend the manner in which optimum selection of goods within budgetary limits maximizes utility.
- Explain the connection between total utility, marginal utility, and the state of consumer equilibrium.
Verified Answer
MS
Learning Objectives
- Comprehend the manner in which optimum selection of goods within budgetary limits maximizes utility.
- Explain the connection between total utility, marginal utility, and the state of consumer equilibrium.