Question

Suppose Barry is maximizing his utility from consuming used paperback novels and audio books. The price of a used novel​ = $4 and the price of an audio book​ = $8. If the marginal utility of the last novel was 32 units of utility​ (utils) what was the marginal utility of the last audio book​ purchased? A. 2 utils B. 12 utils C. 16 utils

Answer 1

Answer:

None of the answers is correct, it should be 64 utils

Explanation:

If Barry's utility from consuming a used novel is 32 utils and the book costs $4, he was able to get 8 utils per dollar (= 32 / $4).

If an audio book costs $8, then Barry should obtain $8 x 8 utils per dollar = 64 utils.