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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

Respuesta :

Answer:

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.

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.

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