Sharon purchases two products with a given fixed budget, orange juice and soda. Her marginal utility from orange juice is 60 and

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4 years ago

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Sharon purchases two products with a given fixed budget, orange juice and soda. Her marginal utility from orange juice is 60 and

her marginal utility from soda is 30. The price of a bottle of orange juice is $2.00 and the price of soda is $1.00. These data suggest that Sharon ___________.

Business

1 answer:

yuradex [85] · Answer 1 · 2021-12-10T10:45:20+03:00

Answer:

Sharon is trying to maximize her marginal utility under the fixed budget.

Explanation:

She is buying exactly twice as many orange juices than sodas, because her marginal utility from juice is twice as much as her marginal utility from soda (60 x 30).

She is considering the marginal utility above the price when making her purchase decisions, because while orange juice provides more utility, it is also more expensive than sodas ($2.00 per bottle vs $1.00 per bottle).