Question

Martha's current marginal utility from consuming orange juice is 75 utils per ounce and her marginal utility from consuming coffee is 50 utils per ounce. If orange juice costs 25 cents per ounce and coffee costs 20 cents per ounce, is Martha maximizing her total utility from the two beverages?

Answer 1

Answer:

• The two are not equal and not maximizing her utility.
• Martha should more on orange juice and less on coffee

Explanation:

Martha's currently receiving 75 utils per ounce

orange juice costs 25 cents per ounce  = $0.25 per ounce

then 75 utils per ounce/ $0.25  per ounce = $300  utils from her last dollar spending on the orange juice though only 50 utils per ounce /$0.20 per ounce  = $ 250 utils per dollar from her last dollar exhausted on coffee

• The two are not equal and not maximizing her utility.
• Martha should more on orange juice and less on coffee.

Answer 2

Answer:

Explanation:

marginal utility from orange juice (MUo) = 75

marginal utility from coffee (MUc) = 50

cost of orange juice (Po) = $0.25

cost of coffee (Pc) = $0.20

Utilis per dollar from orange juice = 75 / 0.25

                                        = 300

Utilis per dollar from coffee = 50 / 0.20

                                        = 250

This shows at the present paces of utilization, the spending of Martha's yield that negligible utility per dollar is higher for juice orange when contrasted with coffee. In this manner, the all out utility for Martha isn't expanding. To maximize utility, the minor utility percent for all merchandise or goods ought to be the equivalent.