If the marginal utility of an extra hamburger is 8 utils,the marginal utility of a soft drink is 5 utils,the price of a hamburger is $1,and the price of a soft drink is 50 cents,then the consumer can achieve equilibrium when:
A)she buys more hamburgers.
B)she buys more soft drinks.
C)the price of soft drinks increases.
D)the price of hamburgers decreases.

Question

Quizplus · Accepted Answer

In order to achieve equilibrium, the consumer should allocate their spending in a way that the marginal utility per dollar spent on each item is equal. Currently, the marginal utility per dollar spent on soft drinks (10 utils/$1) is higher than that of hamburgers (8 utils/$1). Therefore, the consumer should buy more soft drinks in order to balance their spending and achieve equilibrium. Buying more hamburgers would further decrease the marginal utility per dollar and move away from equilibrium. Increasing the price of soft drinks or decreasing the price of hamburgers may also affect the equilibrium, but the information provided does not allow for a definitive answer in this regard.

If the Marginal Utility of an Extra Hamburger Is 8