Question

Jason is faced with two choices: A BMW costing $40,000 gives him an additional 1005 units of utility, and a laser printer costing $1,000 gives him an additional 25 units of utility. Rational choice theory would predict that he would choose:

Answer 1

either a BMW or a laser printer because they yield the same marginal printer

Step-by-step explanation:

A rational consumer would choose the good that provides a higher utility

Marginal utility is the additional satisfaction received from consuming an additional unit of a good or service. Marginal utility is the additional utility derived from consuming one more unit of a good. the consumption decision is to consume more units of a good that gives the higher utility per good.

Marginal utility per good = marginal utility / price of the good

BMW = 1005 /40,000 = 0.025

Printer = 25 / $1000 = 0.025