Suppose you have $850 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. Ho
1 answer:
You might be interested in
Answer: Please refer to the explanation section
Explanation:
When a consumer is choosing between two goods which are considered to be perfect substitutes , the optimal bundles choice will be the number of good x and good z that will yield maximum utility is found the ratio of Marginal utility of good x and marginal utility of good z equals the ratio of the Price of good x and the price of good z or The Marginal utility of good x per dollar must be equal to the marginal utility of good z per dollar.
Marginal Utility of good x = MUx
Marginal Utility of Good z = MUz
Utility function = U(qx,qz)
qx and qz maximises U(qx,qz) when
=
or
When she receives the same marginal utility per dollar in good x and good y, utility is maximized