Asked by
Roman Reings
on Dec 19, 2024
Verified
Sharon purchases two products with a given fixed budget, orange juice and soda. Her marginal utility from orange juice is 60, and her marginal utility from soda is 30. The price of a bottle of orange juice is $2.00, and the price of soda is $1.00. These data suggest that
A) Sharon is maximizing her utility from the given fixed budget.
B) Sharon should buy more orange juice and less soda.
C) Sharon should buy more soda and less orange juice.
D) Sharon should buy less orange juice and soda.
Marginal Utility
The change in total satisfaction or utility that a consumer receives from consuming one additional unit of a good or service.
Utility Maximization
An economic principle suggesting that individuals or firms seek to allocate their resources in a way that maximizes their utility or satisfaction.
- Comprehend the principle of maximizing utility and its impact on consumer decision-making.
- Implement the concept of marginal utility to price ratio (MU/P) for the identification of the optimal mix of goods that maximizes utility.
Verified Answer
EA
Learning Objectives
- Comprehend the principle of maximizing utility and its impact on consumer decision-making.
- Implement the concept of marginal utility to price ratio (MU/P) for the identification of the optimal mix of goods that maximizes utility.