Asked by MaryJean Throm on Jun 14, 2024
Verified
Assume that diminishing marginal utility applies to both dish soap and floor wax and that Minh is spending all of her income.If Minh purchases a combination of dish soap and floor wax such that MUDish soap/ /PDish soap = 50 and MUFloor wax/ /PFloor wax = 30,to maximize utility,Minh should buy _____ soap and _____ floor wax.
A) less;less
B) more;more
C) more;less
D) less;more
Diminishing Marginal Utility
The principle that as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.
Floor Wax
Floor wax is a cleaning and polishing product used to protect and enhance the appearance of floor surfaces.
Dish Soap
A liquid cleaner designed to break down grease and grime on dishes, allowing for easier washing and cleaning.
- Gain insight into how consumers manage to reach maximum utility with their given budgetary constraints.
- Realize the importance of equal marginal utility per dollar spent in maximizing one's utility.
Verified Answer
FB
Felecia BarnettJun 20, 2024
Final Answer :
C
Explanation :
The formula MUS/PS represents the marginal utility per dollar spent on each product. Since Minh is spending all of her income, she wants to allocate her spending in a way that maximizes her total utility.
Given that the MUS/PS for dish soap is higher (50) than for floor wax (30), Minh should buy more dish soap and less floor wax. This will allow her to get the most marginal utility per dollar spent and maximize her total utility. Therefore, the answer is choice C, "more soap and less floor wax."
Given that the MUS/PS for dish soap is higher (50) than for floor wax (30), Minh should buy more dish soap and less floor wax. This will allow her to get the most marginal utility per dollar spent and maximize her total utility. Therefore, the answer is choice C, "more soap and less floor wax."
Learning Objectives
- Gain insight into how consumers manage to reach maximum utility with their given budgetary constraints.
- Realize the importance of equal marginal utility per dollar spent in maximizing one's utility.