If MU_a/P_a= 100/$35 = MU_b/P_b= 300/? = MU_c/P_c= 400/?, the prices of products B and C in consumer equilibrium A) cannot be determined from the information given. B) are $105 and $140, respectively. C) are $105 and $175, respectively. D) are $100 and $200, respectively.

Question

Quizplus · Accepted Answer

To find the prices of products B and C, we set the marginal utility per dollar equal for all products. For product B, 300/? = 100/35, solving gives ? = $105. For product C, 400/? = 100/35, solving gives ? = $140.

If MUa/Pa = 100/$35 = MUb/Pb = 300/? = MUc/Pc

If MU_a/P_a= 100/$35 = MU_b/P_b= 300/? = MU_c/P_c