Question

Ian gets 20 utils of satisfaction from eating a pear that costs $0.40. calculate the corresponding marginal utility per dollar spent.

Answer 1

Marginal utility refers to the amount of satisfaction a person gains from consuming one more unit of a good or service. We can calculate the marginal utility by dividing the amount of satisfaction over the total dollar spent.

Marginal Utility = 20 utils / $0.40

Marginal Utility = 50 utils per dollar spent