contestada

Paul consumes only books and DVDs. At his current consumption​ bundle, his marginal utility from DVDs is 20 and from books is 2.Each DVD costs ​$​6 , and each book costs ​$1 Is he maximizing his​ utility? Explain

Respuesta :

ogorwyne

Yes we can conclude that Paul is maximizing his utility.

How to solve for the utility

marginal utility of good b = MUb

price of good b = Pb

marginal utility of good d = MUd

price of good d = Pd

MUb / Pb = 20/6 = 3.33

MUd / Pd = 2/ 1 = 2

(MUb / Pb) > (MUd / Pd)

This is given that 3.33 is greater that 2.

Hence we have to say that he is maximizing his utility given that 3.33 is greater than 2.

Read more on utility maximization here: https://brainly.com/question/13033788

#SPJ1

Otras preguntas