Maria is consuming three units of pizza and two units of soda. The price of pizza...

Maria is consuming three units of pizza and two units of soda. The price of pizza is $5 and the price of soda is $1. If she is consuming the optimal consumption bundle and her marginal utility of the third unit of pizza is 50, her marginal utility of the second soda is________utils.

Expert Solution

The optimal bundle of the consumer is always such that the marginal utility (in terms of money) derived from the consumption of last unit of all the commodities is equal.

In other words, Marginal Utility(Pizza) ÷ Price of pizza = Marginal utility (Soda) ÷ Price of soda

This relationship will hold at the optimal consumption bundle.

50÷5 = MU(Soda) ÷ 1

10 = MU (Soda)

Thus, the marginal utility derived from second soda unit, that is the optimal consumption bundle, is 10 utils.

Rahul Sunny answered 2 years ago

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