Marginal utility problem..?

Question

Let MUA=8 and MUB=20. Let PA=4 and PB=5. Advise Sarah how to maximize her utility.

a.consume eqaul amount of both goods
b.consume more of good B and less of good A
c.decrease the price of good B
d.increase the price of good A
e.consume more of good A and less of good B

Answer 1

E!


does sarah have the power to decrease the price of good A or B; if she had that capability; there wouldn't be a problem to begin with.



the trick there is to cross multiply because of the inverse proportioanlity

Answer 2

If Sarah spends $4 on A, she gets 8 units of additional utility, which equates to 2 units of utility per $1.
If Sarah spends $5 on B, she gets 20 units of additional utility, which equates to 4 units of utility per $1.

Therefore, Sarah she spend more on B since every extra $ she spends on B she gets an extra 4 units of utility. If she consumes less of A, then she loses 2 units of utility for every dollar she saves, but she can get an extra 4 if she then spends that money on B.

Whichever way you look at it, B has to be the correct answer.

Answer 3

If Sarah spends $4 on A, she gets 8 gadgets of extra suitable application, which equates to 2 gadgets of application consistent with $a million. If Sarah spends $5 on B, she gets 20 gadgets of extra suitable application, which equates to 4 gadgets of application consistent with $a million. hence, Sarah she spend extra suitable on B once you think approximately that each and each extra suitable effectual $ she spends on B she gets an further 4 gadgets of application. If she consumes much less of A, then she loses 2 gadgets of application for each greenback she saves, yet she could possibly get an further 4 if she then spends that money on B. Whichever way you seem at it, B would desire to be the main suited answer.

Answer 4

This should a prank on Sarah. Sarah should be blonde!