I'm not sure what these utility units are, but think of the following:
$10 bottle of wine = 50
This is $.20/unit.
$4 of cheese = 40
This is $.10/unit.
Does this help with your problem?
Bridget has a limited income and consumes only wine and cheese; her current consumption choice is four bottles of wine and 10 pounds of cheese. The price of wine is $10 per bottle and the price of cheese is $4 per pound. The last bottle of wine added 50 units to Bridget's utility, while the las pound of cheese added 40 units
a. Is Bridget making the utility-maximizing choice, Why or Why not?
b. If not, what should she do instead?
1 answer
1 answer