Amy purchased four cantaloupes at $2 each and three watermelons at $4 each. If Amy is following the optimal consumption rule, the marginal utility of the fourth cantaloupe and third watermelon are:
A) 12 and 24, respectively.
B) four and three, respectively.
C) 40 and 10, respectively.
D) six and eight, respectively.

Question

Quizplus · Accepted Answer

The optimal consumption rule states that the marginal utility per dollar spent should be equal for all goods. For cantaloupes: MU/2 = 12/2 = 6. For watermelons: MU/4 = 24/4 = 6. Both equal 6, satisfying the rule.

Amy Purchased Four Cantaloupes at $2 Each and Three Watermelons