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29 February, 06:25

Assume that Leeann consumes only two products, humus and yogurt (so all of her income is spent on these two goods). Let the price of humus be $1 and the price of yogurt be $0.50. Her original income is $5. Leeann originally buys 3 units of humus and 4 units of yogurt and uses up all of her income. At these levels the marginal utility of humus for her is 4 and marginal utility of yogurt for her is 2. Is she at an optimal solution?

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  1. 29 February, 06:37
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    No to be in an optimal solution the marginal utility fo both consumer goods should be equal.

    As the utility for humus is greater than yougurt it should add more humus to their consumer bag until adding units of any of these gets the same utility
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Home » Business » Assume that Leeann consumes only two products, humus and yogurt (so all of her income is spent on these two goods). Let the price of humus be $1 and the price of yogurt be $0.50. Her original income is $5.
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