Asked by
Kendall Fisher
on Nov 04, 2024
Verified
Ellie is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is 100 and the marginal utility from the last unit of Y that she consumes is 50. Ellie's utility is only maximized if
A) the prices of X and Y are the same.
B) the price of good X is twice that of good Y.
C) the price of good Y is twice that of good X.
D) We cannot determine whether Ellie is maximizing her utility.
Marginal Utility
The increased enjoyment or value one gets from the consumption of an extra unit of a good or service.
- Analyze the repercussions of changing prices on the achievement of maximum utility.
Verified Answer
KB
Learning Objectives
- Analyze the repercussions of changing prices on the achievement of maximum utility.