Jess gets half as much marginal utility from an additional bagel than from an additional muffin.If the price of muffin is $2.00/each,then Jess is maximizing utility if the price of a bagel is
A)$1.00
B)$1.50
C)$2.00
D)$4.00

Question

Quizplus · Accepted Answer

Jess is maximizing utility when the marginal utility per dollar spent is equal for both goods. Since the marginal utility of a bagel is half that of a muffin, the price of a bagel should be half the price of a muffin, which is $1.00.

Jess Gets Half as Much Marginal Utility from an Additional