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What is the marginal utility per dollar of buying

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A person goes into a store to buy either one banana or one pear for lunch. The marginal utility of the banana is 50 utils and the marginal utility of the pear is 25 utils. The banana costs $1.50 and the pear costs $0.50.

1. What is the marginal utility per dollar of buying the banana?

2. What is the marginal utility per dollar of buying the pear?

3. Which one will the person buy?

For questions 4, 5, and 6, use the following numbers in the following table. Assume the person has $8 to spend. Remember, the answer may contain a fraction or decimal.

Candy - $4 a bag Milk - $2 a carton Eggs - $0.25 a carton

1st bag or carton 40 utils 30 utils 10 utils

2nd bag or carton 36 utils 24 utils 5 utils

3rd bag or carton 16 utils 18 utils 2 utils

4. How many bags of candy will this person buy?

5. How many cartons of milk will they buy?

6. How many cartons of eggs will they buy?

Do not assume the answer has to be an integer. It can be a fraction or a decimal. If you write it as a decimal, go to 3 numbers to the right of the decimal point.

Reference no: EM132500384

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