Nancy is consuming her optimal consumption bundle of burritos and margaritas.The marginal utility of her last burrito was 75 utils,and each burrito costs $3.Her marginal utility of her last margarita was 100 utils.What is the price of a margarita?
A)$1
B)$2
C)$3
D)$4

Question

Quizplus · Accepted Answer

The optimal consumption bundle is where the marginal utility per dollar is equal for both goods. Thus, 75 utils/$3 = 100 utils/Price of margarita. Solving for the price of a margarita gives $4.

Nancy Is Consuming Her Optimal Consumption Bundle of Burritos and Margaritas.The