Nick Lewis is a strict vegetarian and dislikes the sight and smell of meat products. He buys a raffle ticket supporting the Josh Gottheil Memorial Fund for Lymphoma Research and wins the 3rd prize: a year's supply of hamburger meat. He is willing to trade with his meat-loving friends, and a trade ensues. This is because the
A) marginal utility of meat for them is positive and for Nick, it's negative
B) total utility of meat for them and for Nick is positive
C) MU/P of the goods his friends trade away is higher than their MU/P of meat
D) MU/P of meat for Nick is higher than the MU/P of the goods he gets for the meat
E) his friends have a negative total utility of meat, but wish to help Nick

Question

Quizplus · Accepted Answer

CA) Nick's marginal utility for meat is negative because he dislikes meat, while his friends' marginal utility for meat is positive because they enjoy it. This difference in marginal utility makes the trade beneficial for both parties.C) The MU/P (marginal utility per price) of the goods his friends trade away is higher than their MU/P of meat, indicating that they value what they are giving up less than the meat they are receiving, making the trade worthwhile for them. Similarly, for Nick, the trade allows him to exchange something of negative utility for something of positive utility.

Nick Lewis Is a Strict Vegetarian and Dislikes the Sight