What is marginal utility per dollar in optimal allocation

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Reference no: EM13816225

Use the following to answer the questions below:

z is the marginal utility per dollar, x is the amount spent on product A, and y is the amount spent on product B.

Assume MUA = z = 10 – x and MUB = z = 21 – 2y.

Assume that the consumer has $10 to spend on A and B; that is, x + y = 10.

(a) What is best way to allocate the expenditure of the $10?

(b) What is the marginal utility per dollar in the optimal allocation?

Reference no: EM13816225

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