Question

The table shows​ darlene's marginal utility numbers for ice cream sundaes and milkshakes. darlene is trying to decide which item to purchase​ first, a sundae or a​ milkshake, knowing that she wants to receive the most utility for each dollar she spends.

Answer 1

Online, the relevant values are that she gets a marginal utility of 24 when she buys the first sundae and she gets a marginal utility of 16 when she buys, THe milkshake. It seems that the sundae is the better choice, but we also have to factor in price. Per dollar, she gets 24/6=4 marginal utility from buying her first sundae. Regarding milkshakes that cost 4 dollars, she gets 16/4=4 marginal utility per dollar. Hence, both sweets give her the same utility per dollar and thus she is indifferent between them.