Question

Maylin goes to her local sporting goods store to buy socks and jogging shorts. Socks cost​ $10 per pair and jogging shorts cost​ $15 each. At her current consumption bundle pair of 4 pairs of socks and 2 jogging​ shorts, her marginal benefit from the last pair of socks is 20 and the marginal benefit of the last jogging short is 30. Maylin should​ ________.

Answer 1

Answer:

Maylin should purchase one unit of each socks & jogging shorts.

Step-by-step explanation:

In case of two goods, consumer is at equilibrium when marginal utility per dollar spent on last unit of the goods are equal, ie MU 1 / P1 = MU 2 / P2 (MU are the marginal utilities / marginal benefit of two goods, P are the price of two goods)

Given : MU1 (So) = 20, MU2 (JSh)  = 30, P1 (So) = 10, P2 (JSh) = 15

So, equilibrium is at where MU1 (So) / P1 (So) = MU2 (JSh) / P2 (Jsh)

20/10 = 2, & 30/15 = 2.  MU's per dollar are equal for both.

So Maylin is in equilibrium, she should purchase one unit of each socks & jogging shorts.