Question

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?

A. 1 pair of sandals
B. 3 bananas, 1 pizza slice
C. 3 pizza slices
D. 3 pairs of sandals
E. 2 pizza slices

Answer 1

Answer:A pair of sandals.

Explanation:Its so obvious stating that the marginal utility derived from sandals is higher compared to the other two items. You maximize your utility by going for the item with highest satisfaction which is glaringly sandals.

You also maximize your utility by considering the item which is economica prudent to one needs or want.