Sven consumes only beer and bratwurst. We can define the addition to \"happiness
ID: 1251843 • Letter: S
Question
Sven consumes only beer and bratwurst. We can define the addition to "happiness" of consuming an additional beer as the marginal utility of beer and that for bratwurst as the marginal utility of bratwurst. The prices of beer and bratwurst are fixed and Sven has a limited budget. In order to maximize "happiness" subject to his limited budget, Sven should purchase beer and bratwurst so that
a) the marginal utility of beer is the ame as the marginal utility of bratwurst.
b) he spends the same amount on beer as on bratwurst.
c) the addition to happiness of the last beer is the same as the addition to happiness of the last bratwurst.
d) the addition to happiness per dollar spent on beer is the same as the addition to happiness per dollar spent on bratwurst.
Explanation / Answer
The right answer is d) the addition to happiness per dollar spent on beer is the same as the addition to happiness per dollar spent on bratwurst so the last dollar could not have been better spent for more happiness on the other good c) the addition to happiness of the last beer is the same as the addition to happiness of the last bratwurst. & a) the marginal utility of beer is the ame as the marginal utility of bratwurst. marginal utility is the addition to happiness per unit is not right because beer could be +2 happy (then +1) and bratwurst +2 (then +1) happy but beer is $1 and bratwurst is $2 so $2 in beer = +3 and $2 in bratwurst =+2 happy b) he spends the same amount on beer as on bratwurst. is not right because beer could be +4 happy (then +3) and bratwurst +2 (then +1) happy but beer is $1 and bratwurst is $2 spent equal $1 in beer = +4 and $1 in bratwurst =+1 happy leading to +5 where is better choice is all $2 on beer = +7 happy
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