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25 December, 19:23

Joseph 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 he is consuming the optimal consumption bundle and his marginal utility of the third unit of pizza is 50, his marginal utility of the second soda is:

A. 50.

B. 5. C. impossible to determine unless you know Joseph's income.

D. 10.

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Answers (1)
  1. 25 December, 23:08
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    D) 10

    Explanation:

    Joseph is consuming pizzas at $5 per slice and sodas as $1 per soda.

    If the marginal utility of the third slice is 50, then the utils per dollar = 50 / $5 = 10 utils per dollar.

    Since the soda costs $1, and it provides the same utils per dollar as the pizza, then the marginal utility = $1 x 10 utils per dollar = 10 utils
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