A friend of Dylan's is operating a concession stand for a youth sporting league and wants Dylan's advice on pricing.He plans to sell popcorn for $4,but is unsure of the price to charge for peanuts.Popcorn provides Dylan with 36 utils,while peanuts provide 27 utils.Dylan offers his personal preference as a suggestion,so what is the maximum price Dylan is willing to pay for peanuts?
A) $9
B) $7
C) $4
D) $3
E) $1.50

Question

Quizplus · Accepted Answer

To determine the maximum price Dylan is willing to pay for peanuts, we need to find the ratio of utils to price for both popcorn and peanuts:

Popcorn: 36 utils / $4 = 9 utils per dollar
Peanuts: 27 utils / $x = 27/x utils per dollar

Since Dylan prefers popcorn over peanuts, we can assume he would be willing to pay the same price for popcorn as he would for peanuts and still receive the same amount of satisfaction. Therefore, we can set the ratios equal to each other and solve for x:

9 = 27/x
x = $3

Therefore, the maximum price Dylan is willing to pay for peanuts is $3. The best choice is D.

A Friend of Dylan's Is Operating a Concession Stand for a Youth