Question

The marginal utility from the first three bananas consumed are: 19, 15, and 5 respectively. The marginal utility from the first three pizza slices are: 48, 33, and 3 respectively. The marginal utility from the first three pairs of cheap sandals is 120, 30, and 6. Each banana costs $1, pizza costs $3 per slice, and a pair of sandals cost $6. You have $6 in your budget. How do you maximize your utility

Answer 1

If the sales target is $6, the consumer must buy one pair's cheap sandal because it gets a maximum value of 20 per $spent.

Step-by-step explanation:

The computation of maximize utility is shown below:-

Bananas Pizza Cheap Sandals

Units MU MU/Price MU MU/Price MU MU/Price

1 19 19 48 16 120 20

2 15 15 33 11 30 5

3 5 5 3 1 6 1

If the sales target is $6, the consumer must buy one pair's cheap sandal because it gets a maximum value of 20 per $spent.