Ask Question
BusinessBusiness
18 September, 10:22

Michael is maximizing utility by consuming three colas at $3 a piece and four hot dogs. The last cola gave him 300 units of utility, and the last hot dog gave him 500 units of utility. The price of each hot dog is: A. $4.00. B. $3.00. C. $5.00. D. $2.50.

+2
Answers (1)
  1. 18 September, 13:53
    0
    C. $5

    Explanation:

    Marginal utility is the benefit gained from consuming an additional unit of a product or service.

    According to the question, Michael is maximizing utility when Marginal Utility / Price of colas is equal to Marginal Utility / Price of hotdogs. Marginal utility can thus be found by solving the following equation for X (the price of hot dog)

    MU/P of Colas = MU/P of hot dogs

    300/3 = 500/X

    3/300 = X/500

    X = (3/300) x 500

    X = 0.01 x 500

    X = 5

    Hence, the price of each hot dog is $5.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Michael is maximizing utility by consuming three colas at $3 a piece and four hot dogs. The last cola gave him 300 units of utility, and ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Andrew, a pharmacist, realized that he should stock extra supplies of a particular medicine to respond to an outbreak of a particular infection in the city.
Answers (1)
A specific research objective from the information obtained in the small groups is to
Answers (1)
JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,290,000. JRE2 recognizes revenue upon contract completion.
Answers (1)
All of the following are true regarding social security except
Answers (1)
6. Roughly how many employers conduct background checks? A. About one-third B. All employers C. About two-thirds D. Employers usually don't conduct background checks
Answers (1)
New Questions in Business
Acme Foods wants to make its chips saltier, but it doesn't want to spend more than it has to on salt. A sample of consumers are asked to compare its current chip (saltiness = 100) with saltier versions and to say whether the new version is saltier.
Answers (1)
Which of the following comparisons best isolates the impact of a change in activity on performance?
Answers (1)
If an investor anticipates an annual rental income from a leased property to be $400,000 dollars, this expected sum has a direct bearing on what the investor will pay for the property. This is an example of
Answers (1)
In comparison to industry averages, Okra Corp. has a low inventory turnover, a high current ratio, and an average quick ratio. Which of the following would be the most reasonable inference about Okra Corp.? A. Its current liabilities are too low. B.
Answers (2)
The individual with the highest valuation of the good will win in which of the following auctions? A. Sealed Bid Auction B. English Auction C. Dutch Auction D. All of the above.
Answers (1)
Home » Business » Michael is maximizing utility by consuming three colas at $3 a piece and four hot dogs. The last cola gave him 300 units of utility, and the last hot dog gave him 500 units of utility. The price of each hot dog is: A. $4.00. B. $3.00. C. $5.00. D.
Sign Up Forgot Password?