Question

Adhira buys chocolates and almonds. She has 3 bars of chocolates and 4 bags of almonds. The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18

Is Adhira maximizing her utility?
A) No, she must buy 1 more chocolate bar to equate her quantities of the two goods.
B) No, she must cut back to 3 bags of almonds to equate her quantities of the two goods.
C) No, without information on her income and the prices of the two goods, we cannot answer the question.
D) Yes, the marginal utility from the last unit of each good is equal.

Answer 1

The correct answer is D) Yes, the marginal utility from the last unit of each good is equal.

Step-by-step explanation:

We compare the marginal utility per price of each good.

It doesn´t matter how much money we have. As you spend money, you look for the best Marginal utility buying different product, so you don´t care about the quantity of each product or service , yo compare the marginal utility per price, and you choose the highest.

In this case the marginal utility from the last unit of each good is equal so you are maximizing your utility