Ask Question
BusinessBusiness
29 November, 01:44

Larry and Teri allocate their consumption between two goods: hats and bats. The price of hats is $4 each, and the price of bats is $8 each. For Larry, the marginal utility of the last hat consumed was 8, and the marginal utility of the last bat was 24. For Teri, the marginal utility of the last hat was 6, and the marginal utility of the last bat was 12. Which consumer is not maximizing his/her utility

+3
Answers (1)
  1. 29 November, 02:18
    0
    Answer: Teri

    Explanation: The price of the hats and bats for both consumers are the same. However, Larry gets more marginal utility for the last unit of each item that he consumed.

    Marginal Utility is the satisfaction derived from consuming an additional unit of a good or service. The first unit consumed usually gives the most satisfaction, while the last unit gives the least satisfaction.

    Larry

    marginal utility of the last hat = 8

    marginal utility of the last bat = 24

    Teri

    marginal utility of the last hat = 6

    marginal utility of the last bat = 12

    Compared to Larry, Teri is not maximizing her utility as much. This applies to both goods, the hats and the bats.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Larry and Teri allocate their consumption between two goods: hats and bats. The price of hats is $4 each, and the price of bats is $8 each. ...” 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
Blitz Industries has a debt-equity ratio of. 6. Its WACC is 9.1 percent, and its cost of debt is 6.4 percent. The corporate tax rate is 22 percent. a. What is the company's cost of equity capital? b.
Answers (1)
Write an acronymic sentence for the following: Five world capitals in any order: Copenhagen, New Delhi, Warsaw, London, Madrid
Answers (1)
Behavioral economics Group of answer choices studies why people choose not to optimize. studies why people optimize. studies why people sometimes don't optimize. studies why people behave badly when buying and selling.
Answers (2)
On January 2, 2017, Bering Co. disposes of a machine costing $44,000 with accumulated depreciation of $24,625. Prepare the entries to record the disposal. under each of the following separate assumptions. 1. The machine is sold for $18,250 cash. 2.
Answers (1)
Pete is a recent finance graduate who has two passions: music and finance. Upon graduation, he was offered an opportunity to join a struggling rock band with a lot of potential, or a job at a large well-established financial services company.
Answers (1)
New Questions in Business
Louis wrote a check of $100 to the electricity company. After a few days he received a Notice of Dishonor from the bank regarding the check he sent to the electricity company. Why did Brian receive a Notice of Dishonor? A. check was cleared B.
Answers (2)
Based on counting the number of galaxies in a small patch of the sky and multiplying by the number of such patches needed to cover the entire sky, the total number of galaxies in the observable universe is estimated to be approximately: a.
Answers (1)
Farmers successfully selecting for increased oil content in soybeans over many generations is an example of what type of selection?
Answers (1)
You purchased 1,000 shares of the New Fund at a price of $23 per share at the beginning of the year. You paid a front-end load of 2.5%. The securities in which the fund invests increase in value by 9% during the year. The fund's expense ratio is 1.
Answers (1)
Kinslow Manufacturing Company paid a dividend yesterday of $2.50 per share. The dividend is expected to grow at a constant rate of 5% per year. The price of Kinslow's common stock today is $25 per share.
Answers (1)
Home » Business » Larry and Teri allocate their consumption between two goods: hats and bats. The price of hats is $4 each, and the price of bats is $8 each.
Sign Up Forgot Password?