Suppose your favorite ice cream flavor, strawberry, costs $1.50 per cone and chocolate costs $1.00 per cone. If you receive 10 utils when you eat chocolate ice cream, how many additional utils would you need to get from eating strawberry ice cream to make you indifferent between purchasing the two flavors of ice cream?
A) 15
B) 10
C) 25
D) 5
E) 20

Question

Quizplus · Accepted Answer

The correct answer is A.The marginal utility per dollar of chocolate ice cream is 10 utils/$1.00. To make you indifferent between the two flavors, the marginal utility per dollar of strawberry ice cream must also be 10 utils/$1.00. Since strawberry ice cream costs $1.50 per cone, you would need to get 15 utils from eating a cone of strawberry ice cream to be indifferent between the two flavors.

Suppose Your Favorite Ice Cream Flavor, Strawberry, Costs $1