Suppose the marginal utility (MU) of a paperback books is 60 utils and each book costs $10, while the MU of a hamburger is 50 utils and each costs $7.50. If you consume one movie and buy one hamburger per week, are you attaining consumer equilibrium?
A)Yes, so there is no need to change.
B)No.You need to buy more books and fewer hamburgers to move toward consumer equilibrium.
C)No.You need to buy more hamburgers and fewer books to move toward consumer equilibrium.
D)There is not enough information to answer the question.

Question

Quizplus · Accepted Answer

To achieve consumer equilibrium, the ratio of the marginal utility to the price of each good should be equal. For books, MU/Price = 60/10 = 6 utils per dollar. For hamburgers, MU/Price = 50/7.5 = 6.67 utils per dollar. Since the utility per dollar spent on hamburgers is higher, you should buy more hamburgers and fewer books to move toward consumer equilibrium.

Suppose the Marginal Utility (MU) of a Paperback Books Is