Burritos and margaritas are priced at $3 and $5 each,respectively.If the marginal utility of the last burrito is 15 utils,then,in consumer equilibrium,the marginal utility of the last margarita is:
A) 15 utils.
B) 20 utils.
C) 25 utils.
D) 30 utils.

Question

Quizplus · Accepted Answer

In consumer equilibrium, the ratio of the marginal utility to price should be equal for all goods. Therefore, (MU of burrito / Price of burrito) = (MU of margarita / Price of margarita). Given MU of burrito is 15 utils and price is $3, the ratio is 15/3 = 5. For margaritas, the price is $5, so MU of margarita should be 5 * 5 = 25 utils.

Burritos and Margaritas Are Priced at $3 and $5 Each,respectively