Answer:
$1
Explanation:
Utility is the satisfaction a person derives from consumption of a product.
Consumers seek to maximise utility when they have choices between products.
They choose products that gives them most satisfaction.
In this scenario gets 0.5 unit satisfaction from consuming a bagel to 1 unit of satisfaction from consuming muffins.
She will maximise utility in bagels when she pays a price that will give her satisfaction of consuming one muffin.
Therefore
0.5 utility on bagel = x
1 utility on muffin = $2
Cross multiply
x = ( 2 * 0.5) ÷ 1
x = $1
So Jess gets same satisfaction from 2 bagels as she gets from $2 of muffin
