Question
Consumer optimum requires that consumers make purchases so for that the last dollar spent on all goods, the ratio of marginal utility to the price of the good is
equal
.
Part 2
We know the marginal utility of good A is three
times the marginal utility of good B, and the price of A is $4.50
.
Since we know the price of good A is three times the price of good B. In this case the price of good B would be $ 6.75.
I don't understand how to get $6.75?
the price of good B can be determined by relying on the consumer utility mazimizing rule ( MU A / P A) =(MUB/ PB) --> (8/4.50) =(12.00/PB).
Do you know where the 8 on (8/4.50) come from? and the 12.00 on (12.00/PB) come from?
equal
.
Part 2
We know the marginal utility of good A is three
times the marginal utility of good B, and the price of A is $4.50
.
Since we know the price of good A is three times the price of good B. In this case the price of good B would be $ 6.75.
I don't understand how to get $6.75?
the price of good B can be determined by relying on the consumer utility mazimizing rule ( MU A / P A) =(MUB/ PB) --> (8/4.50) =(12.00/PB).
Do you know where the 8 on (8/4.50) come from? and the 12.00 on (12.00/PB) come from?
Answers
GPT 3.5
In the given information, it is mentioned that the marginal utility of good A is three times the marginal utility of good B. This means that the ratio of the marginal utilities can be expressed as MU(A)/MU(B) = 3/1.
In the utility maximizing rule (MU(A)/P(A)) = (MUB/PB), we can substitute the given values to find the price of good B.
We are given that the price of good A is $4.50. Plugging in these values, we have:
(3/1)/(4.50) = (MUB/PB)
Simplifying the left side of the equation, we get:
(3/4.50) = (MUB/PB)
To find the price of good B, we can cross-multiply and solve for PB:
3 x PB = 4.50 x 1
3 x PB = 4.50
Dividing both sides by 3 gives us:
PB = 4.50/3 = $1.50
Therefore, the price of good B would be $1.50.
I'm not sure where the numbers 8 and 12.00 are coming from in the question you provided. It seems there might be a mistake or misunderstanding in the given information.
In the utility maximizing rule (MU(A)/P(A)) = (MUB/PB), we can substitute the given values to find the price of good B.
We are given that the price of good A is $4.50. Plugging in these values, we have:
(3/1)/(4.50) = (MUB/PB)
Simplifying the left side of the equation, we get:
(3/4.50) = (MUB/PB)
To find the price of good B, we can cross-multiply and solve for PB:
3 x PB = 4.50 x 1
3 x PB = 4.50
Dividing both sides by 3 gives us:
PB = 4.50/3 = $1.50
Therefore, the price of good B would be $1.50.
I'm not sure where the numbers 8 and 12.00 are coming from in the question you provided. It seems there might be a mistake or misunderstanding in the given information.