Suppose a consumer has $150 to be spent on either books or video games. Video games cost $50 each and books cost $10 each. The consumer decides to buy 2 video games and 5 books. The marginal utility of the 2nd video game is 100, and the marginal utility of the 5th book is 80. Did this consumer follow the utility maximizing rule? Group of answer choices

Question

farahtop4842 farahtop4842

21-03-2020
Advanced Placement (AP)

contestada

Suppose a consumer has $150 to be spent on either books or video games. Video games cost $50 each and books cost $10 each. The consumer decides to buy 2 video games and 5 books. The marginal utility of the 2nd video game is 100, and the marginal utility of the 5th book is 80. Did this consumer follow the utility maximizing rule? Group of answer choices

Respuesta :

ACCESS MORE

Otras preguntas

What was the location of the largest mound-building culture in early North America?

Cells that absorb nutrients from the gastrointestinal tract are of what tissue type

active and passive secruity measures are employed to identify, detect, classify and analyze possible threats inside of which zone?

After K completed an application for health insurance, a paramedical scheduled an appointment to check height, weight, blood pressure, and collect blood and uri

Miles became frusterated when his little sister kept talking during the movie,select the word from the drop down,the word during functions as a adjative,preposi

2y+8x=1 write in slope intercept form

You arrive on the scene to find a scuba diver on board a boat slumped over in the captain's chair with frothy blood in his mouth. The captain states that the d

Five bells begin to ring together and they ring at intervals of 3, 6, 10, 12 and 15 seconds, respectively. How many times will they ring together at the same se

Automobiles arrive at the drive-through window at the downtown Baton Rouge, Louisiana. post office at the rate of 4every 10 minutes. The average service time is

Which pair of statements best describes an essential amino acid? It is an amino acid that contains peptide bonds. An example is proline. It is an amino acid tha

enyo enyo · Answer 1 · 2020-03-22T22:22:12+01:00

Answer:

The consumer is not currently following utility maximising rule

Explanation:

A two commodity consuming consumer , is at utility maximising equilibrium, as per cardinal utility, when :

MU G1 / P G1 = MU G2 / P G2 ; where

MU G1 , PG1 & MU G2 , P G2 are marginal utilities & prices of good 1 & good 2 respectively.

Such because if Marginal Utility per unit price of any good is comparatively more than other, the consumer will consumer more of it & MU of that good will fall until equilibrium equality condition is restored.

Putting in formula, Given : MU G1 = 100 , P G1 = 50 , MU G2 = 80 , P G2 = 10 { Considering Video game as good 1 , books as good 2 }

[ 100 / 50 = 2 ] < [ 80 / 10 = 8 ]

So , Additional satisfaction pe unit price spend is not equal for both goods - videos & books. It is more for books. Hence , the consumer is not currently following utility maximising rule [is not at equilibrium].