Mariellen is considering buying Good A and Good B. Her MUa/Pa is 1.5, and Good B costs $60. How many points will Good B need to add to her utility for her to maximize her satisfaction from consuming both goods?

Question

Quizplus · Accepted Answer

To maximize satisfaction, the ratio of the marginal utility to price for both goods should be equal. Given MUa/Pa = 1.5 and Pb = $60, for Good B, the marginal utility (MUb) should be such that MUb/Pb = 1.5. Therefore, MUb = 1.5 * $60 = 90 points.

Mariellen Is Considering Buying Good a and Good B