Ask Question
BusinessBusiness
24 June, 16:12

Assume a consumer has maximized her utility by buying two products: cupcakes and cheese. Her marginal utility for the last cupcake is 30. If the price of cupcakes is $3 and the price of cheese is $5, how much is her marginal utility for her last unit of cheese?

+5
Answers (1)
  1. 24 June, 16:18
    0
    50

    Explanation:

    In maximizing utilty the ratio of marginal utilities of both goods, which is called the Marginal Rate of Substitution (MRS), must be equal to the prices ratio.

    Here, the ratio of prices (cupcakes over cheese) is 3/5. So, the MRS (marginal utility of cupcakes (Ucc) over marginal utility of cheese (Uch))) must be 3/5.

    As Ucc=30, then 30/Uch = 3/5. So, Uch = 50.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Assume a consumer has maximized her utility by buying two products: cupcakes and cheese. Her marginal utility for the last cupcake is 30. ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Who would pay the most as a percentage of income under a progressive tax?
Answers (1)
In the open-economy macroeconomic model, other things the same, which of the following combinations make the exchange rate fall? a. U. S. investment demand falls and foreign demand for U. S. goods falls b. U. S.
Answers (1)
If the market interest rate remains at 5% for the next 29 years, and if Leggio's credit rating remains constant, then the price of its bonds will decrease gradually over time and be exactly $1,000 at maturity. True or false
Answers (1)
A broker-dealer is looking to expand its business. In an attempt to lure the business of a prominent local investment adviser representative (IAR), it offers the IAR several of its services allowing them to be paid for by soft dollars.
Answers (1)
Kirov, Inc. reports credit sales of $200,000 for the year ending December 31. The year-end unadjusted balance of its Allowance for Doubtful Accounts is a debit of $9,000. Experience suggests 6 percent of its net sales will be uncollectible.
Answers (1)
New Questions in Business
Keesha Co. borrows $230,000 cash on December 1 of the current year by signing a 150-day, 12%, $230,000 note. 1. On what date does this note mature? 2. & 3.
Answers (1)
Foreign investors have preferred to invest in the united states except for which of the following reasons?
Answers (1)
If you order your credit report online, you can have access to it within minutes. A. True B. False
Answers (1)
A student working on a history project decided to find a 95 percent confidence interval for the difference in mean age at the time of election to office for former american presidents versus former british prime ministers.
Answers (1)
A rent ceiling creates a shortage. As a result, which of the following occurs? A. only a loss of consumer surplus for tenants B. a gain of both consumer and producer surplus C. only a loss of producer surplus for landlords D.
Answers (1)
Home » Business » Assume a consumer has maximized her utility by buying two products: cupcakes and cheese. Her marginal utility for the last cupcake is 30.
Sign Up Forgot Password?