Respuesta :
Answer:
Toby is not maximizing his utility because MUp/Pp > MUc/Pc
Explanation:
given data
marginal utility consuming peanuts = 100 utils per ounce
marginal utility consuming cashews = 200 utils per ounce
peanuts cost = 10 cents per ounce
cashews cost = 25 cents per ounce
solution
we know that Toby will have maximize utility when here
Marginal utility of peanut ÷ price of peanut = Marginal utility of cashew ÷ cash ..........................1
MU (p) ÷ P (p) = MU (c) ÷ P (c)
put here value
[tex]\frac{100}{10} = \frac{200}{25}[/tex]
but here
10 > 8
so we can say Toby is not maximizing his utility because MUp/Pp > MUc/Pc
Answer:
NO.
Explanation:
Given that,
Marginal utility from consuming peanuts = 100 utils per ounce
Marginal utility from consuming cashews = 200 utils per ounce
Cost of peanuts = 10 cents per ounce
Cost of cashews = 25 cents per ounce
Toby is maximizing his total utility from the kinds of nuts at a point where the marginal utility per cent for peanuts and marginal utility per cent for cashews are equalize.
Marginal utility per cent for peanuts:
[tex]=\frac{Marginal\ utility\ from\ consuming\ peanuts}{Cost\ of\ peanuts}[/tex]
[tex]=\frac{100}{10}[/tex]
= 10
Marginal utility per cent for cashews:
[tex]=\frac{Marginal\ utility\ from\ consuming\ cashews}{Cost\ of\ cashews}[/tex]
[tex]=\frac{200}{25}[/tex]
= 8
Therefore,
Toby is not maximizing his total utility from the kinds of nuts because the marginal utility per cent for peanuts is greater than the marginal utility per cent for cashews . So, there is a need to consume more of peanuts because the marginal utility per cent for peanuts is higher.
