Question

Lisa consumes only pizzas and burritos. In equilibrium, her marginal utility of pizza is 30 and her marginal utility of a burrito is 24. The price of a pizza is $5.

Answer 1

Complete question is stated below:

Lisa consumes only pizzas and burritos. In equilibrium, her marginal utility of pizza is 30 and her marginal utility of a burrito is 24. The price of a pizza is $5. What is the price of a burrito?

Explanation:

When there is equilibrium, the ratio of the marginal utility of a one commodity divided by the price of that commodity must be equal to the marginal

utility of 2nd commodity divided by the price of a 2nd commodity.

Therefore:

Marginal utility of pizza / Price of Pizza = Marginal utility of Burrito / Price of Burrito

$\frac{30}{5}=\frac{24}{x} \\x= \frac{24*5}{30} \\x=120/30\\x=4$

Thus, the price of a burrito must be $4.