Asked by Meera Patel on Jun 12, 2024
Verified
The price of chicken = $5, while the price of pork = $9. If, after spending her entire budget, the consumer has MU of chicken = 6, while the MU of pork = 12, then the consumer should have bought more chicken and less pork in order to increase her total utility.
Marginal Utility
The additional satisfaction or utility gained from consuming one more unit of a good or service.
Total Utility
The overall satisfaction or benefit a person receives from consuming a particular quantity of goods or services.
- Identify the ways in which consumers navigate maximizing enjoyment while adhering to budgetary restrictions.
- Gain insight into the effects of price and income changes on the preferences and utility maximization of consumers.
Verified Answer
KN
Kathy NguyenJun 15, 2024
Final Answer :
False
Explanation :
The consumer is maximizing utility when the marginal utility per dollar spent is equal for all goods. Here, MU of chicken per dollar is 6/5 and MU of pork per dollar is 12/9. Since these ratios are equal (both simplify to 1.2), the consumer has already maximized total utility given her budget.
Learning Objectives
- Identify the ways in which consumers navigate maximizing enjoyment while adhering to budgetary restrictions.
- Gain insight into the effects of price and income changes on the preferences and utility maximization of consumers.