Jason is trying to decide whether to buy a bagel or a muffin for breakfast.The bagel costs $.50 and has a marginal utility of 5.The muffin costs $1 and has a marginal utility of 20.Which should he buy,and why?
A)The muffin,because it has a higher marginal utility
B)The muffin,because it has a lower marginal utility per dollar
C)The bagel,because it costs less
D)The bagel,because it has a higher marginal utility per dollar
E)The muffin,because it has a higher marginal utility per dollar

Question

Quizplus · Accepted Answer

To determine the best choice, we need to compare the marginal utility per dollar for both options. The bagel has a marginal utility per dollar of 10 (5/0.50), while the muffin has a marginal utility per dollar of 20 (20/1). Therefore, the muffin provides more value for the money spent and is the better choice for Jason.

Jason Is Trying to Decide Whether to Buy a Bagel