A function that always falls as a buyer enjoys more units of a good. The sum of

Question

A function that always falls as a buyer enjoys more units of a good. The sum of the marginal utilities from the consumption of good. How much utility a seller gets from producing a good. The four determinants of demand that are held constant when we consider a movement along a demand curve include all of the following except Select one: Tastes. Income. Price. Availability and price of substitute goods. Michael's preferences are shown in the table below. Michael has $48 to spend on cola and pretzels. Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. What combination should he purchase in order to maximize his utility? Four colas and four pretzels. Five colas and two pretzels. Five colas and five pretzels. Three colas and five pretzels. Total utility is maximized when Price is equal to marginal utility. Price is less than marginal utility. Marginal utility is maximized. Marginal utility is zero. Which of these examples is an exam

Explanation / Answer

The answer is a. Four colas and four pretzels.

To maximize utility, the consumer should choose the goods that deliver the most marginal utility per dollar. The first
pretzel has a MU per dollar of 7.5, the second pretzel and first cola have a MU per dollar of 5, and the third pretzel
and the second coke have a MU per dollar of 4. Once Michael buys four colas and four pretzels, he will have spent
his $48 and maximized his utility.

On another note, options c and d don't even add up to $48. Lol.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.