Question

Dennis, who consumes only grilled chicken sandwiches and salads with low-fat dressing, has a weekly income of $100 to spend on food. He is currently consuming 20 grilled chicken sandwiches per week, at a price of $3 each, and 20 salads per week, at a price of $2 each. If the last sandwich and the last salad both added 40 units to Dennis's total utility, he should:___________.
1. buy more salads and fewer sandwiches.
2. is making the utility-maximizing choice.
3. obtains more additional utility per dollar from sandwiches than from salads.
4. should buy more sandwiches and fewer salads.

Answer 1

Answer:

1. buy more salads and fewer sandwiches.

Explanation:

As we know that

$\textup{MU}_{S}=\textup{Marginal utility of Sadwitches}$

$\textup{MU}_{SA}=\textup{Marginal utility of Salad}$

$\textup{P}_{S}=\textup{Price of Sanswithches}$

$\textup{P}_{SA}=\textup{Price of Salads}$

Therefore

$\frac{MU_{S}}{MU_{SA}}=\frac{P_{S}}{P_{SA}}$

$\frac{MU_{S}}{MU_{SA}}=\frac{\ 40}{\ 40}=1$

Now the price ratio is

$\frac{P_{S}}{P_{SA}}=\frac{\ 3}{\ 2}=1.5$

It is probable if you rising marginal utility numbering and reduce denominator marginal utility. If you reduce their intake, the MU of a food item will raise. Such decrease in the composition would make the quantity of the food element scarce. And its usefulness goes up. The Numerator here is sandwich MU. And to increase their marginal utility, you can reduce sandwich consumption.

Salad should need just the reverse. You raise salad intake so the MU reduces. Therefore you have to eat more salads and less chicken sandwiches to maximise the utility. So, salad is replaced by sandwiches for chicken.