If MU a/ Pₐ = 20/$3 = MU b/ Pᵦ = 70/? = MU c/ P_c = 100/?, the prices of products B and C in consumer equilibrium

A) cannot be determined from the information given.
B) are $10.5 and $15, respectively.
C) are $12 and $20, respectively.
D) are $15 and $10.5, respectively.

Question

David Feynberg · Accepted Answer

Final Answer : B, Explanation :  The correct prices of products B and C can be determined using the given marginal utilities (MU) and prices. The formula for consumer equilibrium is MUa/Pa = MUb/Pb = MUc/Pc. Given MUa/Pa = 20/$3, MUb = 70, and MUc = 100, we can solve for Pb and Pc. For product B, 20/$3 = 70/Pb, solving for Pb gives $10.5. For product C, 20/$3 = 100/Pc, solving for Pc gives $15. Therefore, the prices of products B and C are $10.5 and $15, respectively.

If MU a/ Pₐ = 20/$3 = MU b/ Pᵦ = 70/? = MU c/ P_c = 100/?, the prices of products B and C in consumer equilibrium

A) cannot be determined from the information given.
B) are $10.5 and $15, respectively.
C) are $12 and $20, respectively.
D) are $15 and $10.5, respectively.

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Learning Objectives

Related questions

If MU a/ Pₐ = 20/$3 = MU b/ Pᵦ = 70/? = MU c/ Pc = 100/?, the prices of products B and C in consumer equilibriumA) cannot be determined from the information given.B) are $10.5 and $15, respectively.C) are $12 and $20, respectively.D) are $15 and $10.5, respectively.

Definitions

Learning Objectives

Learning Objectives

Related questions

If MU a/ Pₐ = 20/$3 = MU b/ Pᵦ = 70/? = MU c/ P_c = 100/?, the prices of products B and C in consumer equilibrium

A) cannot be determined from the information given.
B) are $10.5 and $15, respectively.
C) are $12 and $20, respectively.
D) are $15 and $10.5, respectively.