Respuesta :
Mr. Rational is a utility maximizer, he should buy less of X and more of Y.
What do you mean by marginal utility?
- In economics, marginal utility refers to the additional pleasure or benefit (utility) a buyer receives by purchasing an additional unit of a good or service.
What is marginal utility and formula?
- The general rule in economics is that marginal utility equals total utility change divided by change in quantity of goods.
- The equation looks like this Total utility difference divided by amount of commodities difference equals marginal utility.
- Find the first event's overall utility.
According to the question:
The amount that Mr. Rational is going to spend = $27.
Quantity of good X = 5 units.
Price of good X (Px) = $3 per unit.
Marginal utility of 5th unit of X (MUx) = 30.
Quantity of good Y = 6 units.
Price of good Y (Py) = $2 per unit.
Marginal utility of 6th unit of Y (MUy) = 18.
Now find [tex]$\frac{M U x}{P x}=\frac{30}{3}=10$[/tex]
Now [tex]$\frac{M U y}{P y}=\frac{18}{2}=9$[/tex]
Since the [tex]\frac{M U x}{P x}$ is greater than $\frac{M U y}{P y}$.[/tex]
So, good x will be substituted for y in order to reach the consumer equilibrium.
[tex]$\frac{M U x}{P x}=\frac{M U y}{P y}$[/tex]
Learn more about marginal utility here:
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